Central Depository Services (India) Limited Annual Report 2017 - 2018
Embracing Tomorrow with a Green Technology edge Forward-Looking Statements
Contents In this Annual Report, we have disclosed forward- looking information to enable investors to comprehend our prospects and take investment Corporate Overview 01-09 decisions. This report and other statements - written and oral - that we periodically make contain forward-looking statements that set out anticipated Embracing Tomorrow with a 01 results based on the management’s plans and Green Technology Edge assumptions. We have tried, wherever possible, CDSL at a Glance 02 to identify such statements by using words such Events and Milestones 04 as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar Chairman’s Message 06 substance in connection with any discussion of 10 Years Financial Highlights 08 future performance. We cannot guarantee that Corporate Information 09 these forward-looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are Statutory Reports 11-60 subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or Board of Directors’ Report 11 uncertainties materialise, or should underlying Report on Corporate Governance 29 assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated Management Discussion and 46 or projected. Readers should keep this in mind. Analysis We undertake no obligation to publicly update any forward-looking statement, whether as a result of Financial Statements 61-170 new information, future events or otherwise.
Standalone 61 Consolidated 115
NOTICE 171
To get this report online and for any other information log on to www.cdslindia.com As one of India’s leading securities depository, we are motivated to take the leadership role towards creating a better tomorrow by leveraging Green Technology Edge. From facilitating holding and transacting of various securities in digital form to facilitating non-cash corporate actions to offering KYC services and allowing holding of insurance policies in electronic form. From offering a gamut of online services such as e-voting, e-Locker, electronic access to security information, National Academy Depository, to enabling various services on the mobile platform.
We have adequately invested in digital technologies to facilitate a convenient, dependable and secure platform for market participants, while ensuring a better and paperless world.
We are,
Embracing Tomorrow with a Green Technology Edge CORPORATE OVERVIEW - CDSL at a Glance
CDSL at a Glance
Central Depository Services (India) Limited (hereafter referred to as CDSL / the Company) was initially promoted by the BSE Ltd. which thereafter divested its stake to leading banks. CDSL received the certificate of commencement of business from the Securities and Exchange Board of India (SEBI) in February 1999. All leading stock exchanges like the BSE Ltd., National Stock Exchange and Metropolitan Stock Exchange of India have established connectivity with our Company. Our constant endeavour is to provide convenient, dependable and secure depository services at affordable cost to all market participants.
To ensure proper functioning and the efficient discharge of our responsibilities, some of our activities have been organised in subsidiary companies.
CDSL SUBSIDIARIES
CDSL Ventures CDSL Insurance CDSL Commodity Limited (CVL) Repository Limited Repository Limited (CCRL) CVL is registered with SEBI The subsidiary has CCRL is operating a and the Unique Identification arrangements with several Commodity Repository on Authority of India (UIDAI) and life insurance companies the lines of a Securities MHRD. and three general insurance Depository under the companies for holding policies jurisdiction of Warehousing Undertakes ‘Know Your Client in electronic form. Development and Regulatory (KYC)’ services for investors Authority (WDRA). in the capital markets The arrangement enables operates National Academic policy holders to hold and Depository. monitor insurance policies with ease.
Our client portfolio and the services that we offer to them are enumerated below: Depository Participants (DPs) and other give effect to a range of non-cash corporate actions capital market intermediaries such as bonus issue, subdivision of holdings and The DPs act as our agent and offer depository conversion of securities in a merger, amalgamation services to the beneficial owner (BO) of the or in an initial public offering. securities. The Registrar and Transfer Agents (“RTAs”) and Clearing Members (“CMs”) are the Capital market intermediaries other intermediaries involved in the process We provide KYC services in respect of investors of issue and transfer of securities on our in Indian capital markets to all capital electronic platform. market intermediaries.
Corporates Insurance Companies We offer facilities to issuers to credit securities to We facilitate holding of insurance policies in a shareholder’s or applicant’s demat accounts to electronic form to the holders of these policies.
02 | Annual Report 2017-18 Commodity Exchanges and Warehouse Others Service Providers We extend online services such as e-Voting, We facilitate holding and transacting in electronic e-Locker, National Academy Depository, easi negotiable warehouse receipts (eNWRs). The eNWRs (Electronic Access to Security Information), easiest can be pledged or transferred in off market or (Electronic Access to Security Information and market mode. Execution of Secured Transaction) and mobile application (MyEasi, M-Voting). We also regularly conduct investor meetings and other awareness programmes.
KEY STRENGTHS
1. India’s leading securities depository with the highest share of incremental growth of BO accounts and largest network of DPs As of March 31, 2018, we had 594 DPs servicing across 29 states and 7 union territories including two overseas centres The number of service centres grew from 16,764 in FY 2015-16 to 17,473 in FY 2017-18 Our BO accounts grew at a CAGR of 17% from 10.8 million in FY 2015-16 to 14.8 million in FY 2017-18
2. Convenient and dependable depository services at competitive prices for a wide range of securities We are directly connected to our DPs (operating from over 17,000 centres across India) through our centralised database systems which ensure relatively low initial set-up costs and minimal incremental costs. This allows our DPs to offer depository services on a real-time basis to our investors at competitive prices
3. Stable revenue base due to repeat business in multiple offerings in the Indian securities and financial services market As of March 31, 2018, we held over 17.11 million capital market investor records under CVL, the first KYC Registration Agency (KRA) As of March 31, 2018, we had opened approximately 3.55 lakhs active e-Insurance accounts, holding more than 88,500 insurance policies in electronic form
4. State-of-the-art technology and robust infrastructure and IT systems We are one of the few depositories globally to be awarded ISO 22301:2012 certification for our Business Continuity Management System (“BCMS”) Our Information Security Management System (“ISMS”) complies with ISO 27001 standard
5. High economies of scale leading to steady growth in profitability Our stable business and steady revenue growth with control on costs has allowed us to consistently enhance investor’s value
6. Led by an experienced senior management team The senior members of our management team have an average work experience of over 25 years We believe in continuous employee development and are continually investing in them through regular training programmes to improve skills and service standards, enhance loyalty, reduce attrition rates and increase productivity
CDSL | 03 CORPORATE OVERVIEW - Events & Milestones
Events & Milestones
1999 2002 2004 2005
• The Union Finance • Launched our internet • Launched our internet • Number of active demat Minister of India, facility “easi” (electronic facility “easiest” accounts crossed Mr. Yashwant Sinha access to securities (electronic access to 1 million flagged off the Company information) securities information • Number of companies operations and execution of secured • Commenced online admitted for demat transaction) • Commenced the inter-depository transfer, crossed 5,000 settlement of trades in enabling on-line transfer demat mode through BOI of securities between Shareholding Limited, the both the depositories any clearing house of BSE time during the specified business hours
2006 2007 2008 2009
• Awarded the BS7799 • Signed an MoU with • Number of active • Honourable Minister for certification from the Depository Trust & demat accounts touched Corporate Affairs of India, Det Norske Veritas Clearing Corporation 4.5 million Mr. Salman Khurshid (Rotterdam) of New York (“DTCC”), launched our e-voting • Signed an MoU with designed to build a closer platform • CDSL Ventures, our Japan Securities working relationship and wholly-owned subsidiary, Depository Center, Inc. • Signed an MoU with facilitate exchange of was incorporated (“JASDEC”) of Tokyo, Bursa Malaysia information designed to build a Depository Sdn. Bhd. • Awarded the ISO 27001 • Signed an MoU with cooperative relationship (“Bursa Malaysia from Det Norske Veritas the Korea Securities Depository”) to pursue (Rotterdam) • Signed an MoU with Depository (“KSD”), aimed cooperative relationship National Depository • CDSL Ventures began at promoting development and opportunities in Center (“NDC”) to bolster “Customer profiling and of financial services the areas of securities economic relations Record Keeping” of the industries in India clearing and depository between India and KYC of investors for and Korea Russia by encouraging mutual funds • Launched SMS Alert cooperation through facility called “SMART” the mutual exchange of (SMS Alerts Related to experience Transactions) • Signed an MoU with Taiwan Depository & Clearing Corporation (“TDCC”), aimed at mutual benefits and further development in the financial market by cooperation in operations and operation linkages, exchange of personnel and new developments • Signed an MoU with Euroclear SA/NV, designed to promote cross-border investment and explore the possibility of establishing an operational link with Euroclear SA/NV
04 | Annual Report 2017-18 2010 2012 2013 2015
• Signed an agreement • Mr. U. K. Sinha, SEBI • Transaction Using SMS • The number of active with Nepal Stock Chairman launched Texting (“TRUST”), demat accounts crossed Exchange Limited CDSL Ventures Ltd., the acronym for our 10 million (1 crore) (“NEPSE”) to set-up a India’s first and largest Company’s mobile-based depository and clearing KYC Registration agency utility, “Transaction and settlement system Using Secured Texting” in Nepal and to provide was formally launched technical assistance and consultancy services to NEPSE
• CDSL signed an agreement with The Nepal Stock Exchange Limited (NEPSE), in the presence of Mr. S.M. Krishna, 2016 2017 2o18 Minister of External Affairs, Government of • Launched m-Voting, an • Listed on the National • CDSL included in the India and Smt. Sujata e-Voting mobile app for Stock Exchange (NSE) NSE NIFTY 500, NIFTY Koirala, Deputy Prime shareholders to cast their after receiving an Smallcap 250 & NIFTY Minister, Nepal to set-up vote at their convenience overwhelming response in Mid-Smallcap 400 Indices the IPO a Depository and Clearing • Registered with UIDAI as • The number of active & Settlement System Authentication Service • Launched CDSL demat accounts crossed in Nepal Agency (ASA) & KYC Commodity Repository 15 million (1.5 crore) Service Agency (KSA) Limited (CCRL); formal • Introduced the National to facilitate e-KYC of registration certificate Academic Depository investors by providing received from Shri Ram (NAD) with a view to authentication and KYC Vilas Paswan, Hon’ble obviate the issues services respectively Union Minister of associated with the issue Consumer Affairs, Food of academic mark sheets, and Public Distribution degrees and convocation certificates in paper form • CDSL included in MSCI India Domestic Small Cap Index
CDSL | 05 CORPORATE OVERVIEW - Chairman’s Message
Chairman’s Message
Dear shareholders, It is indeed a pleasure to present before you the 20th Annual Report of your Company and the first one following our successful Initial Public Offering (IPO) in June 2017. Since inception, CDSL has come a long way and has become a force to reckon with in the capital market. The IPO marks an important milestone for us and I place on record my gratitude to all the investors, who came forward and reposed their trust in us.
It is an overwhelming experience to witness such an During the year, CVL got the mandate from the outstanding response from every investor category. Ministry of Human Resources Department (MHRD) The retail quota got oversubscribed by nearly 24x, / University Grants Commission (UGC) to offer the qualified institutional buyer (QIB) by 148x and National Academic Depository (NAD) services, an the non-institutional investor segment by 563x. initiative of Government of India. Already, 311 Overall, the issue was oversubscribed by 170x, universities have signed agreements to host their making it the most subscribed maiden issue in transcript data on NAD and we expect more to over a decade in Dalal Street and the fourth largest materialise as the concept gets popularised with offering ever in terms of oversubscription. university officials.
Performance review FY 2017-18 has been a positive year for the country’s capital markets. The markets remained Our financial buoyant and indices neared an all-time high. This contributed to a strong growth in our volumes by performance has been 74.22% as we added 25.73 lakh accounts. Our encouraging as we financial performance has been encouraging as we posted a net profit of` 77.69 crore as compared to posted a net profit of ` 67.85 crore in FY 2016-17. Driven by the strong ` 77.69 crore as performance, the Board has recommended compared to ` 67.85 a dividend of ` 3.50 per share, highest-ever in CDSL’s history. crore in FY 2016-17. Driven by the strong The year also saw us adequately leveraging our platform and technology competence as we reached performance, the Board out to more companies to enable their shareholders has recommended a cast vote electronically. This facility has seen significant traction. As on March 31, 2018, our dividend of ` 3.50 per e-Voting system recorded 16,500 instances of voting share, THE highest-ever with 5,037 companies signing agreements. in CDSL’s history. Coming to our subsidiaries, both CDSL Ventures Ltd. (CVL) and CDSL Commodity Repository Limited (CCRL) have shown steady performance.
06 | Annual Report 2017-18 CCRL, engaged in Commodity Repository, is our latest venture that got operationalised in September 2017. It facilitates farmers, farmers producer As on March 31, 2018, our organisations (FPOs), manufacturers, etc., to obtain electronic warehouse receipts (negotiable or non- e-Voting system recorded negotiable) in a demat account against commodities 16,500 instances of voting deposited in warehouse regulated by Warehousing Development and Regulatory Authority. The with 5,037 companies signing depositor thereafter can sell the same or pledge agreements. the commodity for finance. Within a short span, nearly 87 entities have joined CCRL as Repository Participants, which is an encouraging sign.
Outlook I take this opportunity to thank all the stakeholders I have strong reasons to believe the market will including the Members of the Board for their continue to sustain its growth momentum going into valuable guidance, support and prudent counsel, FY 2018-19. The sentiments on domestic economic the SEBI and stock exchanges and the Auditors activity, after a period of lull, is reviving as evident and Legal Advisers, for their valuable support in firming industrial activity and exports. There and contribution. I also thank the Ministry of are clear signs of revival in investment activity as Finance. reflected in the sustained expansion in capital goods production and rising imports, although at a slower I place on record our sincere thanks to all pace than in FY 2017-18. Further, with economic shareholders for the sustained confidence reposed activity for most major countries globally recovering, in us. And finally, I thank all the employees for the global demand is witnessing an upsurge. This their dedication and contribution to ensure CDSL’s should eventually encourage exports and boost growth and success. Together, we shall continue to fresh investment. make CDSL bigger and better.
Led by these developments, the RBI is positive on the Indian economy. It expects the country’s GDP growth to strengthen from 6.6% in FY 2017-18 to Warm Regards, 7.4% in FY 2018-19. I am sure your Company will be on the right side of the opportunity and T. S. Krishna Murthy stand benefited. Chairman & Public-Interest Director
CDSL | 07 CORPORATE OVERVIEW - 10 Years Financial Highlights
10 Years Financial Highlights
Financial Highlights - STANDALONE (As on March 31, 2018) (` in Lakhs)
As per IGAAP As per Ind AS
P & L Account 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Income from 5852.51 8121.17 8538.48 7825.91 7535.53 7543.93 8564.28 10173.65 12161.89 15416.79 Operations
Other Income 1691.35 2017.36 1670.62 2398.38 2912.97 3001.03 1955.36 3139.24 3360.52 2470.33
Total Income 7543.86 10138.53 10209.10 10224.29 10448.50 10544.96 10519.64 13312.89 15522.41 17887.12
Total Expenditure 2886.60 3396.59 3354.73 3318.83 5069.74 5466.15 5749.87 5514.27 6338.76 7248.98
PBDIT 5053.67 7289.92 7396.38 7259.48 5563.60 5461.55 5260.14 8142.09 9532.92 11284.56
Exceptional / (266.77) (72.27) 85.16 168.81 3310.40 Extraordinary Items
Profit Before Tax 4657.26 6741.94 6854.37 6638.70 5306.49 5163.97 4938.58 11109.02 9183.65 10638.14
Total Tax Expenses 1255.19 1990.04 2050.54 1892.98 1196.52 1023.69 1464.88 3424.25 2398.59 2869.44
Profit for the year 3402.07 4751.90 4803.83 4745.72 4109.97 4140.28 3473.70 7684.77 6785.06 7768.70
Other Comprehensive ------(5.13) (31.34) (0.45) income
Total Comprehensive ------7679.64 6753.72 7768.25 Income
Share Capital 10450.00 10450.00 10450.00 10450.00 10450.00 10450.00 10450.00 10450.00 10450.00 10450.00
Reserves & Surplus 9350.31 12638.76 15985.15 18909.09 20573.87 22268.95 22975.61 32170.12 35779.49 39774.53
Net Worth 19800.31 23088.76 26435.15 29359.09 31023.87 32718.95 33425.61 42620.12 46229.49 50224.53
Earnings Per Share (`) 3.26 4.55 4.60 4.54 3.93 3.96 3.32 7.35 6.49 7.43
Book Value Per 18.95 22.09 25.30 28.09 29.69 31.31 31.99 40.78 44.24 48.06 Share (`)
Return on Average Net 18% 22% 19% 17% 14% 13% 11% 19% 15% 16% Worth (%)
08 | Annual Report 2017-18 CORPORATE INFORMATION
Central Depository Services (India) Limited (CIN:L67120MH1997PLC112443) Board of Directors
Public Interest Directors
Shri Taruvai Subbayya Krishna Murthy Chairman DIN: 00279767 (Former Chief Election Commissioner of India)
Shri Aravamudan Krishnakumar Public Interest Director DIN:00871792 (Former Managing Director of State Bank of India)
Shri Rajender Mohan Malla Public Interest Director DIN: 00136657 (Former Chairman and Managing Director of IDBI Bank Limited)
Shri Bontha Prasada Rao Public Interest Director DIN: 01705080 (Former Chairman and Managing Director of Bharat Heavy Electricals Limited)
Smt. Usha Narayanan Public Interest Director DIN: 07738036 (Former Executive Director of Securities and Exchange Board of India)
Shareholder Directors
Shri Venkat Nageswar Chalasani Shareholder Nominee Director DIN: 07234179 (Deputy Managing Director of State Bank of India, Global Markets)
Shri Nehal Naleen Vora Shareholder Nominee Director DIN:02769054 (Chief Regulatory Officer, BSE Limited)
Shri Nayan Chandrakant Mehta Shareholder Nominee Director DIN:03320139 (Chief Financial Officer, BSE Limited)
Shri Kumarapuram Venkateswaran Subramanian Shareholder Nominee Director DIN:07842700 (Head– Strategy, Process & Governance for Standard Chartered Bank)
CDSL | 09 CORPORATE OVERVIEW - CORPORATE INFORMATION
Managing Director and Chief Executive Officer Shri P.S.Reddy DIN:01064530 Management Team Shri P.S.Reddy Managing Director and CEO Shri Joydeep Dutta Executive Director and Group Chief Technology Officer Shri Bharat Vrajlal Sheth Chief Financial Officer Shri Sunil Alvares Executive Vice President - New Projects & On deputation to subsidiary as COO Smt. Nayana Mandar Ovalekar Chief Operating Officer - Operations & Admission Cell Shri Ramkumar K. Executive Vice President - On deputation to subsidiaries as COO Shri Farokh Patel Vice President - Audit, Inspection & Compliance Shri Gaurang Shah Vice President - Finance & Accounts Smt. Sunanda Markande Vice President - New Projects Shri Prithwijit Dinda Vice President - Information Technology Shri Suresh Ahirekar Vice President - Information Technology Shri Vishwas Nagle Vice President - Information Technology Shri S.V.A.N.Acharyulu Vice President - Information Technology Shri Yogesh Kundnani Vice President - Business Development
Bankers Registered Office Bank of India Marathon Futurex, 25th floor, A-Wing, Stock Exchange Branch, Mafatlal Mills Compound, Ground Floor, P.J. Towers, N.M Joshi Marg, Lower Parel (E), Mumbai Dalal Street, Mumbai-400 001 400013 Corporate Identification Number L67120MH1997PLC112443 Auditors (until the conclusion of 20th Annual General Meeting) Deloitte Haskins & Sells Website of Central Depository Services Chartered Accountants (India) Limited and its subsidiaries / ‘Heritage’, 3rd Floor, business lines Near Gujarat Vidyapith CDSL : www.cdslindia.com Off Ashram Road, CVL : www.cvlindia.com Ahmedabad - 380014 CDSL IR : www.cirl.co.in CDSL CR : www.ccrl.co.in Registrar and Share Transfer Agents Link Intime India Pvt. Ltd 247 Park, C-101, L.B.S. Marg Vikhroli (West), Mumbai 400083. Email: [email protected]
10 | Annual Report 2017-18 BOARD OF DIRECTORS’ REPORT
Your Directors have pleasure in presenting the Twentieth Annual Report, along with Audited Statement of Accounts of your company for the year ended March 31, 2018. Due to improved market conditions, the operational income of the company has increased from ` 12,161.89 Lakhs to ` 15,416.79 Lakhs, resulting in an increase of total income from ` 15,522.41 Lakhs to ` 17,887.12 Lakhs.
Financial Highlights Particulars Year ended Year ended March 31, 2018 March 31, 2017 (` in Lakhs) (` in Lakhs) Income from Operations 15,416.79 12,161.89 Other Income 2,470.33 3,360.52 Total Income 17,887.12 15,522.41 Expenditure 6,194.17 5,529.74 Profit before Depreciation and Taxation 11,692.95 9,992.67 Depreciation 646.42 349.27 Profit before exceptional items and tax 11,046.53 9,643.40 Exceptional items (Income) - Profit before contribution to IPF & Tax 11,046.53 9,643.40 Contribution to IPF 408.39 459.75 Profit Before Tax 10,638.14 9,183.65 Provision for Taxation 2,962.40 2,700.00 Provision for Deferred Tax for the year (92.96) (301.41) Profit after Tax 7,768.70 6,785.06 Other Comprehensive Income (Net of Tax) (0.45) (31.34) Total Comprehensive Income 7,768.25 6,753.72 Balance brought forward 35,779.49 32,170.12 Profit available for appropriation 43,547.74 38,923.84 Dividend 3,135.00 2,612.50 Tax (including surcharge and education cess on dividend) 638.21 531.85 Surplus carried to Balance Sheet 39,774.53 35,779.49
CDSL | 11 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
The income from operations comprising of transaction corrected due to implementation of Long Term Capital charges, annual issuers fees, account maintenance Gain Tax (LTCG), political uncertainty and global charges, settlement charges, corporate action charges, factors including rising oil prices etc. during the year under review increased from ` 12,161.89 Lakhs to ` 15,416.79 Lakhs, recording According to World Bank, India’s growth forecast for an increase of 27% over the year 2016-17. As per FY 2018-19 is projected at 7.3% and is seen bottoming SEBI (Depositories & Participants) (Amendment) out from the impact of demonetisation and GST. India Regulations, 2012, transfer of ` 408.39 Lakhs is is still forecasted to retain its position as the world’s made to investor protection Fund. After contribution fastest growing major economy ahead of China, which to Investor Protection Fund, Profit Before Tax (PBT) is forecasted to grow at 6.4%. India’s growth rate in for the year ended March 31, 2018 is ` 10,638.14 FY 2018-19 is projected to hit 7.3% and 7.5% in the Lakhs as against ` 9,183.65 Lakhs of previous year. subsequent year according to the World Bank, as the Similarly, Profit After Tax (PAT) is at` 7,768.70 Lakhs country has “enormous growth potential” compared as against ` 6,785.06 Lakhs. However, Profit before to other emerging economies with the implementation Tax & Profit after Tax for the year ended March 31, of comprehensive reforms. 2018 has increased by 16% and 14% respectively over the previous year after excluding exceptional income Correspondingly, capital raised from equity markets earned in the previous year. has gone up 3.46 times compared to the previous year. The total equity capital raised during FY 2017–18 was Dividend about ` 1,77,116 crores as against about `51,120 Looking into the performance of the Company for the crores raised during FY 2016–17. Of the above, the ` year under review and taking note of the buoyancy funds raised through IPOs was 84,357 crores while in the Capital Market at present, your Directors have the funds raised through Qualified Institutional ` recommended a dividend of ` 3.50 (Rupees Three and Placement (QIP) route was 62,358 crores and ` paise fifty only) per share (35%) for the year ended through Offer for Sale (OFS) was 18,438 crores. March 31, 2018. Operational Highlights Share Capital and Shareholding With the buoyant market conditions and greater As on March 31, 2018 the Share Capital of the retail participation, your company could register a Company is as given hereunder: good growth in its depository operations during the FY 2017–18. Due to positive sentiment prevailing Authorised Share Capital: 150,00,00,000 divided into in the capital markets, the primary market has 15,00,00,000 equity shares of Rs 10 each. seen encouraging response from retail as well as institutional investors. Such positive outlook is Issued and Paid Up Share Capital: 104,50,00,000 reflected in the increase in the number of demat divided into 10,45,00,000 equity shares of Rs 10 each. accounts opened in the Depository. The move towards digitisation of various processes has also Demat holding of Shareholders helped in offering a convenient, hassle-free and cost As of March 31, 2018, out of 10,45,00,000 shares, effective depository services. In order to sustain the 10,44,99,490 shares are in demat mode and 510 growth in its depository business, your company shares are in physical mode. continues to focus on enhancement of operational efficiency, upgradation of technology, service quality The Capital Market Environment and enhanced emphasis on investor education During FY 2017-18, the stock markets witnessed a through seminars / workshops. bullish sentiment due to which the BSE-30 Sensex opened at 29,910 on April 3, 2017 and touched a Securities admitted high of 36,443 in Jan 2018 only to close at 32,968 on Securities like equity shares, preference shares, March 28, 2018. From the high of 36,443, market has mutual fund units, debt instruments, government
12 | Annual Report 2017-18 securities, certificates of deposit, commercial papers and a host of other instruments are available for dematerialisation by the investors. Details of the securities admitted with CDSL are given below:
Securities Year ended Year ended (%) change over March 31, 2018 March 31, 2017 the previous year Equity Shares 9938 9240 7.55 Debt Instruments 8503 8792 -3.28 Other Securities 22257 23371 -4.76 Total 40698 41403 -1.70
Position of Securities held in the System The value and volume of securities held with CDSL in the year under review as compared to the previous year are indicated below:
Holding of Securities Year ended Year ended Increase over the March 31, 2018 March 31, 2017 previous year (%) Value (in million `) 19,839,810 17,735,853 11.86 Volume (in million) 283,920 255,227 11.24
Depository Participants and Service Centers As on March 31, 2018, 594 depository participants held valid registration certificates of Securities and Exchange Board of India (SEBI) as compared to 588 valid SEBI registrations as on March 31, 2017. During the year, new registrations were received for 9 DPs and registrations of 3 DPs were withdrawn/ cancelled. With a large DP network, investors spread across 28 States and 7 Union Territories can avail of CDSL’s depository services. Further, investors have access to 17,473 DP service centers spread across India.
Beneficial Owner Accounts During the year under review, 29.08 Lakh Beneficial Owner (BO) accounts were added, taking the total number of such accounts to 194.04 Lakhs with the net BO accounts at 148.40 Lakhs as on March 31, 2018. The comparative figures of gross and net BO accounts as on March 31, 2017 and March 31, 2018 are given in the following table:
Year ended Year ended Increase over the previous year’s cumulative figure March 31, 2018 March 31, 2017 Number Percentage (%) (Gross) (Gross) 2,908,032 17.62 19,404,479 16,496,447 (Net) (Net) 2,572,626 20.97 14,840,058 12,267,432 Investor Awareness / Education Seminars advantages of holding securities in demat form, CDSL regularly conducts Investor Awareness Programs importance of Financial Planning, Investment avenues in association with various market intermediaries, available, etc. CDSL IPF has also conducted IAPs in MIIs and SEBI. Capital Market Awareness for retail association with financial institutions, ICSI, AMCs investors through such programs has been a major and regional Seminars & IAPs with SEBI in various focus area. We believe investor education can become cities. We have also conducted webinar to reach a significant key to achieving financial inclusion in the investors digitally. Although, these IAPs reach out to capital market. To this end, CDSL IPF has conducted investors in major metros, we have focus to reach the more than 300 Investor Awareness Programs (IAPs) investors in tier-2 and tier-3 cities to inculcate the in this year. Out of these more than 200 programs habit of investment in securities. CDSL IPF has tied are conducted in tier 2 & tier 3 cities and towns. up with various regional newspapers to attract large This initiative allowed investors across geographies, number of investors to attend these IAPs. During the professions and age groups including students, IAPs, informative booklets in English, Hindi and other corporate employees, government servants to come regional languages were distributed for the benefit together and learn the basics of Capital Markets, of investors.
CDSL | 13 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Awards and recognition During the year 2017-2018, your Company has won the following awards:
Award Category Organiser InfoSec Maestros Award Information Security BitStream Mediaworks Express Uptime champion Award Infrastructure Indian Express Data Center Innovation Award Infrastructure Management UBS Digital Leadership and CIO Award CIO of the year Business World Networking pioneer Award Business scalability IDG Innovative CIO Award CIO BitStream Mediaworks BFSI IT Leadership Award IT Leadership Exito BFSI Digital Innovation Award Enterprise Application Indian Express Big50 CISO Award CISO Trescon BFSI Innovative Technology Award Leadership Eletsonline NetApp Innovation Award Data Visionary NetApp
New Initiatives shareholder, generally promoters (Borrowers), Consolidated Account Statement (CAS) Your not to transfer or otherwise alienate the securities company provides to a demat account holder holding and are in the nature of negative lien given in mutual fund units in Statement of Account (SOA) favour of another BO (Lender). form, the CAS with information about transactions c. Transfer in favor of demat account of the Investor and securities held across multiple demat accounts Education and Protection fund Authority of with various Depository Participants - across securities in respect of which dividend has depositories along with mutual fund units held not been paid or claimed for a period of seven in SOA form. The CAS also provides additional consecutive years or more. CDSL maintains the information with respect to mutual fund investments details of shareholders whose securities have like total purchase value / cost of investment in been transferred and the subsequent corporate each scheme of mutual fund in monthly transaction actions thereon. CAS and information like the amount of actual commission paid by AMCs/Mutual Funds (MFs) d. Implementation of various other SEBI initiatives to distributors (in absolute terms) during the half- like (i) Tender offers through settlement year period against the concerned investor’s total mechanism (ii) Enhanced supervision of brokers investments in each MF scheme, the scheme’s (iii) Electronic book mechanism for issuance of average Total Expense Ratio (in percentage terms) securities on private placement basis. for the half-year period, etc. CDSL also provides a facility to its demat account holders to access its Transaction Cum Holding Statements website and download CAS after providing certain As of March 31, 2018, 196 DPs have availed of the security information. The demat account holders service of dispatch of transaction cum holding can also update/ modify the email ID and opt for statements (DOTS and e-DOTS). In FY 2017-18, CDSL receipt of electronic CAS using CDSL’s website. has processed 22.39 Lakh statements.
System Enhancements Corporate Bond database During the year your company released a number of The Corporate Bond database maintained by your system enhancements for increasing the efficacy of company as mandated by SEBI vide its Circular processes No. CIR/IMD/DF/17/2013 dated October 22, 2013, contains information on over 20,701 bonds a. Online registration of demat account holder for issued in demat form by over 2,280 Issuers. The easiest facility enabling the demat account holder database provides comprehensive information on to submit electronic instructions through CDSL the corporate debt instruments including details of website, eliminating need of submission physical Issuers, Instruments issued along with the listing registration form to the respective DPs. status, Redemption details, Names of Debenture b. Recording of Non-Disposal Undertaking (NDU), Trustees and Credit Ratings along with the names where NDUs are undertakings given by a of the Rating Agencies.
14 | Annual Report 2017-18 The credit rating agencies CRISIL, CARE, ICRA and CVL’s National Academic Depository(C-NAD) India Rating are accessing your company’s corporate The Union Cabinet approved establishing a Digital bond database through the secure login and are Depository of Academic Awards (X & XII Certificates, verifying the credit rating displayed and also updating Diplomas, Degrees, Marksheets, Transcripts, etc.) on subsequent rating migrations. The comprehensive and the pattern of Securities Depository to be known as updated information disseminated by your company National Academic Depository (NAD). Government at a single place provides valuable information to the of India, Ministry of Human Resources Department investors and assists them in taking a more informed (MHRD) designated University Grants Commission investment decision. (UGC) as the authorised body for implementation of NAD. NAD, a Project of national importance, was Trade Repository of Corporate Bonds officially launched by Hon’ble President of India, Shri Your company is pleased to inform you that the trade Pranab Mukherjee on July 9, 2017. repository for primary issuances was launched in November, 2016. Your company has data of about CVL NAD renders its services to all of its Stakeholders 6,710 ISINs for primary market issuances and about [Academic Institutions (AIs), Students and Verifiers 7,443 ISINs pertaining to secondary market being (Employers, Consulates, VISA issuing Authorities, traded in the stock exchanges. Background Checkers, etc.)] under one platform. CVL NAD provides secured and online access for AIs Technology Initiatives: to upload Academic Awards, enables Students to In order to keep pace with the new technology and store & share their Awards with Verifiers for online provide greater flexibility and ease of use, CDAS verification. In a span of one year, over 240 AIs have application has been made available to the users registered and benefitted by using CVL’s NAD services. as a browser based service. As a part of continual upgrade process, CDSL has commenced migrating e-Voting its front end to new technology using Dot Net. As on March 31, 2018, 5,037 companies have signed Further considering growth over next 5 years, agreements with CDSL to conduct e-Voting. So far the CDSL has procured and deployed new servers at e-Voting system recorded 16,561 instances of voting Main and DR site. To strengthen security, your carried out by 4,405 Companies. depository has implemented APT solution from McAfee and has implemented SOC for proactive e-Notices and continuous monitoring of security events. In the light of Green Initiative in the Corporate CDSL always benchmarks its practices against Governance by Ministry of Corporate Affairs, CDSL ISO standards and accordingly has undergone has started offering the services to companies for recertification audit for ISO 27001 conducted by sending documents to its shareholders electronically. DNV and is now certified for ISO 27001:2013 for 3 As on March 31, 2018, a total of 309 companies have years. Further CDSL has also undergone periodic signed for availing this service. audit for ISO 22301:2012 (Business Continuity Management System) and has been recommended Corporate Social Responsibility (CSR) for continuation of the Certificate. CDSL’s e-Voting The Ministry of Corporate Affairs (MCA) vide its Service has also undergone periodic audit for ISO circular dated February 27, 2014 notified Section 9001:2015 certification and has been recommended 135 and Schedule VII of the Companies Act 2013 for continuation of the Certificate. relating to Corporate Social Responsibility (CSR) the provisions of which came into effect from April 1, 2014. Continuing Professional Education The CSR provisions require companies satisfying (CPE) Programs - Depository Operations certain criteria to spend 2% of its average net profits Certification Examination (DOCE) of the last three years on CSR activities defined in the National Institute of Securities Markets (NISM) has rules framed in this regard. The Company has been been offering Continuing Professional Education (CPE) actively associated with various NGOs in providing Programs for Associated Persons in the Securities various facilities involving capital expenditure for Market Intermediaries. a sustainable impact of CSR activities. Even during the FY 17-18, your company has sponsored various CDSL, as a NISM Accredited CPE Provider for projects and the report on CSR activities as required conducting CPE Programs, has successfully carried under Companies (Corporate Social Responsibility out 35 programs for 566 participants during the year. Policy) Rules, 2014 is given in Annexure A.
CDSL | 15 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Prevention of Money Laundering Act 2. eKYC as KYC User Agency (KUA) and The Prevention of Money Laundering Act, 2002 Authentication User Agency (AUA) (PMLA) has been brought into force with effect from 3. eSign (electronic signature based on aadhaar July 1, 2005. Subsequent amendments had been number) done to the PMLA Act 2002 and Prevention of Money- laundering (Maintenance of Records) Rules 2005 vide 4. Claim registry for life insurance companies SEBI circular CIR/MIRSD/1/2014 dated March 12, that offer Pradhan Mantri Jeevan Jyoti Bima 2014. CDSL and its depository participants fall under Yojana (PMJJBY) the category of ‘intermediaries’ under section 12 of the 5. GST Suvidha Provider Services SEBI Act and hence, PMLA and the policy guidelines Further, CVL has also received approval from issued by the regulators to combat money laundering SEBI to act as a Registrar and Transfer Agent are applicable to depository operations. (RTA). As required under the guidelines, CDSL has Ø designated Principal Officer, Alternate Officer and CDSL Insurance Repository Limited (CDSL IR) Designated Director to ensure compliance with these Your Company had under the “Guidelines on guidelines. CDSL has prepared policy guidelines for Insurance repositories and electronic issuance implementation of PMLA and the same is reviewed of insurance policies” issued by IRDAI, floated periodically. a separate subsidiary viz:- CDSL Insurance Repository Ltd. (CDSL IR), in the year 2011 to CDSL conducts training programs and updates provide policyholders a facility to keep insurance depository participants on compliance with the policies in electronic form and to undertake aforesaid guidelines. During FY 2017-18, CDSL changes, modifications and revisions in the organised special training programmes wherein the insurance policy with speed and accuracy in Additional Director from FIU–IND updated DPs in order to bring about efficiency, transparency and the matter of compliance with PMLA provisions, cost reduction in the issuance and maintenance filing of Suspicious Transaction Reports and of insurance policies. Leading public sector directly interacted with Principal Officers of DPs at and private sector insurance companies have 4 metro cities. contributed to the equity capital of CDSL IR. At the time of launch in August 2013 the insurance Details of Subsidiary Companies repository services was restricted only to Life Your Company has following subsidiary Companies insurance policies. However, later on during as on March 31, 2018 the current year IRDAI has extended the scope of services to Health insurance policies and 1. CDSL Ventures Limited Motor insurance policies. As on March 31, (CIN U93090MH2006PLC164885) 2018 the repository has opened about 3.50 Lakh 2. CDSL Insurance Repository Limited e-Insurance Accounts (e-IA) in which it holds (CIN U74120MH2011PLC219665) about 85,000 life insurance, Health insurance and Motor insurance policies in electronic 3. CDSL Commodity Repository Limited form. CDSL IR had tied up with twenty-four (CIN U74999MH2017PLC292113) life insurance companies, four health insurance companies and twenty nine general insurance Ø CDSL Ventures Limited companies for holding policies in electronic form. Your company’s wholly owned subsidiary, CDSL Ventures Limited’s main business continues Ø Central Commodity Repository Limited to be KYC business for the capital market (CCRL): intermediaries. CVL continues to be the largest Your company has floated a new subsidiary in the KYC Registration Agency (KRA) controlling about name and style of CDSL Commodity Repository 60% of the market share in the KYC of capital Limited (CCRL) to establish and run a Commodity market. In addition to its core business of being Repository on the lines of a Securities Depository. a KRA for capital market, CVL has also initiated In this regard, Warehousing Development and work on the following business lines, which are in Regulatory Authority (WRDA) has shortlisted various stages of implementation / completion. CCRL as one of the two Repositories for 1. National Academic Depository (NAD) undertaking the Commodity Repository activity.
16 | Annual Report 2017-18 CDSL Commodity Repository Limited has received Directors and KMPs a formal registration certificate as Commodity As per SEBI (Depositories and Participants) Repository on September 26, 2017 from Shri. (Amendment) Regulations, 2012, the appointment Ram Vilas Paswan, Hon’ble Union Minister of and re-appointment of all Shareholder Directors on Consumer Affairs, Food and Public Distribution the board of depository shall be with the prior approval at a function organised by Warehousing of SEBI. Further the Public Interest Directors on the Development and Regulatory Authority (WDRA) board shall be nominated by SEBI. for the launch of WDRA portal and electronic Negotiable Warehouse Receipts (eNWR). Accordingly, SEBI vide its letter dated April 24, 2017 approved appointment of Smt. Usha Narayanan as Multi Commodity Exchange of India Ltd. (MCX) Public Interest Director/ Independent Director. and BSE Investments Ltd. have expressed their desire to take up each 24% of the stake in CCRL SEBI vide its letter dated June 16, 2017 approved and accordingly MCX picked up 24% stake in appointment of Shri Nayan Mehta, Chief Financial CCRL in the month of May, 2018. Officer-BSE Ltd as Shareholder Director of the During the year, the Board of Directors of the company. Company reviewed the affairs of the subsidiaries. In accordance with section 129 (3) of the Further SEBI vide its letter dated February 14, Companies Act, 2013, we have prepared the 2018 approved appointment of Shri Kumarapuram consolidated financial statements of the Company, Venkateswaran Subramanian, Head–Strategy, which forms part of this annual report. Further Process & Governance for Standard Chartered Bank a statement containing the salient features of as Shareholder Director of the company. the financial statement of our subsidiaries in the prescribed format AOC 1 is appended as During the year under review, Shri Balasubramaniam Annexure B to the Board’s report. The statement Venkataramani ceased to be a shareholder Director also provides details of the performance and w.e.f April 24, 2017. financial position of each of the subsidiary. Shri Anant Narayan Gopalakrishnan, Regional Head, In accordance with section 136 of the Companies Financial Markets, ASEAN & South Asia-Standard Act, 2013, the audited financial statements Chartered Bank who was the shareholder Director including the consolidated financial statements resigned vide letter dated July 29, 2017. and related information of the Company and audited accounts of each of the subsidiary are The Board has placed on record its appreciation available on our website www.cdslindia.com. for the valuable services rendered by Shri These documents will be available for inspection Balasubramaniam Venkataramani and Shri Anant till the date of AGM during business hours at the Narayan Gopalakrishnan during their tenure as registered office of the Company. Directors of the company.
Listing of Securities The Independent Directors have given declaration As at the start of the financial year on April 1, 2017, under sub-section (7) of section 149 of the Companies your company was a subsidiary company of BSE Ltd. Act, 2013 confirming that they satisfy the criteria of The Company got its shares listed on National Stock “independence” under section 149(6) the Companies Exchange on June 30, 2017 through Offer for Sale Act, 2013. where BSE Ltd. divested its stake from 50.05 % to 24 %. Consequently, your company has become an As per the provisions of Section 152(6) (d) of the Associate Company of BSE Ltd. Companies Act, 2013, Shri C. Venkat Nageswar, the Shareholder Director was considered for Director Fixed Deposits liable to retire by rotation and being re-appointed Your company has not accepted any deposits within at the ensuing Annual General Meeting. A brief the meaning of Section(s) 73, 74, 75 & 76 of the resume of Shri C. Venkat Nageswar is enclosed as an Companies Act, 2013 and the Rules made thereunder. Annexure C.
CDSL | 17 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
The term of Shri P.S. Reddy, MD & CEO expired Internal Auditors on March 31, 2018. On the recommendation of In terms of the provisions of Section 138 of the Nomination and Remuneration/Compensation Companies Act, 2013 read with Rule 13 of the Committee, the Board of Directors in its meeting Companies (Accounts) Rules, 2014, the Company dated January 20, 2018 approved reappointment of had appointed M/s. Mittal & Associates, Chartered Shri Reddy for a period of five years w.e.f. April 1, Accountants as Internal Auditors & Concurrent 2018 subject to approval of SEBI and shareholders. Auditors of the Company for the FY 2017-18. The SEBI vide its letter dated March 28, 2018 has Board of Directors have approved the appointment of granted an extension of one year i.e. up to March M/s. Ray & Ray, Chartered Accountants as Internal 31, 2019 and has advised the Company to frame Auditors and Concurrent Auditors of the Company for policy on appointment /reappointment of MD & CEO the FY 2018- 2019. keeping in view the recommendations of Gandhi Committee. There are no qualifications, reservations or adverse remarks or disclaimer made by the Internal Auditors During the year under report Shri Nirogi Venkata and Concurrent Auditors in their report. Sesha Pavan Kumar, VP-Legal and Group Company Secretary and Compliance Officer resigned from his Secretarial Auditors and Secretarial Audit duties w.e.f. July 31, 2017 and Shri Amol Purandare Report was appointed as AVP-Legal and Company Secretary M/s. Pramod Shah & Associates, Practicing Company and Compliance Officer w.e.f. August 7, 2017. Shri Secretaries, Mumbai were as Secretarial Auditor Amol Purandare also resigned w.e.f. June 26, 2018. of the Company for the FY 2017-18. A copy of the secretarial audit report issued in form MR-3 by M/s Statutory Auditors & Audit Report Pramod Shah & Associates, Secretarial Auditors is M/s. Deloitte Haskins & Sells, Chartered Accountants, enclosed as an Annexure D to this report. Mumbai were last re-appointed as Statutory Auditors of the company for the year 2017-2018 to hold office The Board of Directors have approved the appointment from the conclusion of the 19th Annual General of M/s. Ragini Choksi & Company, Practicing Company Meeting till the conclusion of the 20th Annual General Secretary, as Secretarial Auditors of the Company for Meeting. a period of three years from April 1, 2018 to March 31, 2021 subject to ratification every year. There are no qualifications, reservations or adverse remarks or disclaimer made by M/s. Deloitte Haskins Related party transactions: & Sells, Chartered Accountants, Mumbai, Statutory The Members of the Company have, vide an Ordinary Auditors in their report. Resolution passed in the 19th Annual General Meeting held on May 29, 2017, consented to the Company Considering the provisions of Sections 139, 141, 142, entering into Related Party Transactions to the 143 and 144 of the Companies Act, 2013 read with extent of ` 1,133.07 Lakhs during the year 2017- Rule 5 & 6 of the Companies (Audit and Auditors) 18. In accordance with the Members’ consent your Rules, 2014, the Board of Directors based on company has entered into transactions with related recommendations of the Audit Committee considered party within the aforesaid limit. All such transactions and approved the appointment of M/s. S. R. Batliboi were in the ordinary course of business and on an & Co as Statutory Auditors of the Company who arm’s length basis. Although the provisions of Section have expressed their willingness and confirmed their 188 of the Companies Act, 2013 are not attracted, eligibility for being appointed as Statutory Auditors of your company had sought Members’ approval for the Company. all related party transactions as a measure of good corporate governance. Suitable disclosure as required Accordingly, M/s. S. R. Batliboi & Co will hold office by the Accounting Standards (AS18) has been made as Statutory Auditors of the Company from the in the notes to the Financial Statements. Similarly, conclusion of the 20th Annual General Meeting till an Ordinary Resolution has also been proposed in the the conclusion of the 24th Annual General Meeting for Notice convening 20th Annual General Meeting seeking FY 2018-19, subject to approval of shareholders. Members’ approval for related party transactions to
18 | Annual Report 2017-18 the extent of ` 1,598.27 Lakhs to be entered into with Act, 2013, for safeguarding the assets of the related parties during the FY 2018-19 company and for preventing and detecting frauds and other irregularities; Disclosure of related party transactions is required to iv) the annual accounts have been prepared on a be made u/s 134 (3) (h) read with Rule 8(2) of the going-concern basis. Companies (Accounts) Rules, 2014 in form AOC 2 which is attached as Annexure E v) internal financial controls to be followed by the company are laid down and that such internal Conservation of Energy, Technology financial controls are adequate and were Absorption and Foreign Exchange Earnings operating effectively. and Outgo vi) proper systems have been devised to ensure Considering the nature of operations of your compliance with the provisions of all applicable company, the provisions of Section 134(3) (m) of laws and that such systems are adequate and the Companies Act, 2013 read with the Companies operating effectively. (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to information to be Implementation of Code of Corporate furnished on conservation of energy and technology Governance absorption are not applicable though the Company As per the SEBI (Depositories and Participants) uses all the possible ways in conserving energy. The (Amendment) Regulations, 2012, the disclosure company has, however, used information technology requirements and corporate governance norms as extensively in its operations. specified for the listed companies mutatis mutandis are applicable to the depository. Your company has Foreign Exchange Earnings and Outgo been, observing the Code of Corporate Governance Details of foreign exchange earnings and outgo during by adopting most of the good corporate governance the year under review are as under: policies as under Schedule V, Regulation 34(3) and 53(f) of Securities Exchange Board of India (Listing Particulars Year ended Year ended Obligation & Disclosure Requirement) Regulation, March 31, 2018 March 31, 2017 2015. The status of implementation of the Code of (` in Lakhs) (` in Lakhs) Corporate Governance is enclosed as Annexure F. Earnings Nil Nil Travel 19.25 25.15 Management Discussion and Analysis Report expenses The Management Discussion and Analysis Report Others 8.18 78.67 for the year ended March 31, 2018 is enclosed as Total 27.43 103.82 Annexure G.
Directors’ Responsibility Statement Board Evaluation Pursuant to Section 134(3)(c) and 134(5) of the Pursuant to the provisions of the Companies Act, 2013, Companies Act, 2013, the Board of Directors reports the Nomination and Remuneration/Compensation that: Committee and the Independent Directors have carried i) in preparation of the annual accounts, the out separately an annual performance evaluation of applicable accounting standards have been its Directors individually, the Board as a whole and followed and proper explanations relating to its Committees and the Chairperson of the Company. material departure, if any, have been provided; The manner in which the evaluation has been carried out has been explained in the Corporate Governance ii) accounting policies have been selected and Report. applied them consistently and the judgements and estimates made are reasonable and prudent Report by Internal Complaints Committee so as to give a true and fair view of the state of As per The Sexual Harassment of Woman at Workplace affairs of the company at the end of the financial (Prevention, Prohibition and Redressal) Act, 2013 (the year and of the profit of the company for that Act) it is mandatory for every employer to constitute period; a Committee to be known as the ‘Internal Complaints iii) proper and sufficient care has been taken for the Committee’. Accordingly, the Committee was maintenance of adequate accounting records in constituted by Board and it meets periodically to review accordance with the provisions of the Companies the complaints, if any, received from female employees.
CDSL | 19 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
During the year the Committee did not receive any Details of significant and material orders complaints in this regard. passed by the regulators or courts or tribunals impacting the going concern status and Particulars of Employees company’s operations in future: Information as required under Sec. 197(12) read with There are no significant and material orders passed Rule 5 of Companies (Appointment and Remuneration by the regulators or courts or tribunals impacting the of Managerial Personnel) Rules, 2014, is enclosed to going concern status and company’s operations in this report as Annexure H. future. Human Resource Development Extract of Annual Return The company always recognised its Human assets In accordance with provisions of section 134(3)(a) of as a critical resource essential for the growth of the the Companies Act, 2013, the extract of the Annual company. It, therefore, accords high importance Return in Form MGT 9 is enclosed as Annexure I. to human resource development and consciously endeavors to enhance the quality and competence of Acknowledgement its employees across cadres. It conducts induction programme for new entrants. Nominating employees Your Directors place on record their sincere gratitude for training at reputed institutions and for attending for the support, guidance and cooperation the company seminars in India and abroad in capital market received from Ministry of Finance, SEBI and other related areas, particularly relating to depositories, has regulatory agencies. The Directors also acknowledge always been a part of human resource development with thanks the continued support of the BSE Ltd, the programme of the company. Industrial relations Promoter, sponsors, all other shareholders, Beneficial during the year continued to be cordial. Owners, Depository Participants, Stock Exchanges, Clearing Houses, Issuers, and Registrar and Transfer Particulars of Loans, Guarantees or Agents. The Directors also express their appreciation investments under section 186 for the unflinching dedication of the employees whose Details of Loans, Guarantees or investments under performance, professionalism and commitment for section 186 of the Companies Act, 2013 are given in rendering high quality services to the clientele of the the notes to the financial statements. company has been commendable.
For and on behalf of the Board
Taruvai Subbayya Krishna Murthy Place : Mumbai Chairman Date : April 21, 2018 (DIN: 00279767)
20 | Annual Report 2017-18 Annexure A ANNUAL REPORT ON CSR ACTIVITIES. 1. It is company’s policy to spend the amount v. Smt. Usha Narayan (Independent Director) allocated for CSR expenditure on activities listed The CSR Committee decided to identify Trusts / in schedule VII of the Companies Act, 2013 and NGOs which carry out CSR activities and which the rules framed thereunder. have experience and expertise in implementing 2. Consequently the Board constituted the Corporate CSR projects. Social Responsibility Committee consisting of the 3. The average of the Net Profit of the company for following members: last three financial years:` 8,411 Lakhs i. Shri Taruvai Subbayya Krishna Murthy, 4. Prescribed CSR expenditure: ` 168 Lakhs (two Chairman (Independent Director) per cent of the amount in item 3 above) ii. Shri Aravamudan Krishnakumar 5. Details of CSR spent during the Financial Year (Independent Director) a. Total amount to be spent for the financial iii. Shri Bontha Prasada Rao (Independent year: ` 355 Lakhs (inclusive of amount Director) unspent of previous year ` 187 Lakhs) iv. Shri Nehal Naleen Vora (Shareholder b. Amount Unspent: ` 248 Lakhs Director) c. The manner in which the amount spent during the financial year is detailed below: ` in Lakhs Sr. Particular Sector in State where Amount Cumulative Amount Spent No which the projects or spent Expenditure Direct or project is program on the up to the through covered was projects or reporting implementing undertaken programs period agency 1. Association of Parents Charitable Maharashtra 149.00 149.00 149.00 of Mentally Retarded Trust Children, Mumbai - ADHAR 2. Varasidhi Visual Charitable Tamilnadu 3.55 3.55 3.55 Vidyashram Trust 3. The Nest India Charitable Maharashra 5.68 5.68 5.68 Foundation Trust. * Amount outlay for AADHAR project by CDSL and CVL jointly
6. The AADHAR, Varasidhi Visual Vidyashram i) Sustainable Innovations Trust India and The Nest India Foundtation project were {Akash Ganga Project (Rain water harvesting completed and ` 158.22 Lakhs spent by CDSL for Drinking water in Rajasthan)} and CVL jointly for the same. 8. The Chairman of the Committee has given a responsibility statement on behalf of the 7. Your Company is in the process of identifying CSR Committee that the implementation and more projects. Currently, the following project is monitoring of CSR policy, is in compliance with identified for financial assistance. CSR objectives and policy of the Company.
Place : Mumbai P.S.Reddy Taruvai Subbayya Krishna Murthy Date : April 21, 2018 Managing Director & CEO Chairman of the CSR Committee
CDSL | 21 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Annexure B FORM AOC-1 (Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)
Statement containing salient features of the financial statement of subsidiaries or associate companies or joint ventures
PART A SUBSIDIARIES (Information in respect of each subsidiary to be presented with amounts in `)
1 Sl. No. 1 2 3 2 Name of the subsidiary CDSL Ventures CDSL Insurance CDSL Commodity Limited Repository Limited Repository Limited 3 The date since when subsidiary was September 25, July 12, 2011 March 7, 2017 acquired 2006 4 Reporting period for the subsidiary April 1, 2017 to April 1, 2017 to March 7, 2017 to concerned, if different from the holding March 31, 2018 March 31, 2018 March 31, 2018 company’s reporting period 5 Reporting currency and Exchange rate Indian Rupee Indian Rupee Indian Rupee as on the last date of the relevant Financial year in the case of foreign subsidiaries 6 Share capital 4,50,00,000 30,00,00,000 50,00,00,000 7 Reserves and surplus 1,09,92,51,000 5,08,71,000 21,89,000 8 Total assets 1,19,96,19,000 36,39,91,000 50,64,72,000 9 Total Liabilities 5,53,68,000 1,31,20,000 42,83,000 10 Investments 1,09,19,67,000 23,12,62,000 43,86,08,000 11 Turnover 42,82,36,000 2,27,76,000 28,68,4000 12 Profit before taxation 32,73,12,000 1,20,06,000 58,79,000 13 Provision for taxation 8,52,21,000 19,40,000 36,90,000 14 Profit after taxation 24,20,91,000 1,00,66,000 21,89,000 15 Proposed Dividend NIL NIL NIL 16 Extent of shareholding (in percentage) 100% 51% (Direct holding) 100% & 3.25% (through Subsidiaries) 1. Names of subsidiaries which are yet to commence operations: NIL 2. Names of subsidiaries which have been liquidated or sold during the year: NIL
22 | Annual Report 2017-18 PART B ASSOCIATES AND JOINT VENTURES Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures Name of Associates or Joint Ventures Name 1 Name 2 Name 3 1. Latest audited Balance Sheet Date - - - 2. Date on which the Associate or Joint Venture was associated or - - - acquired 3. Shares of Associate or Joint Ventures held by the company on - - - the year end No. - - - Amount of Investment in Associates or Joint Venture - - - Extent of Holding (in percentage) - - - 4. Description of how there is significant influence - - - 5. Reason why the associate/joint venture is not consolidated - - - 6. Networth attributable to shareholding as per latest audited - - - Balance Sheet 7. Profit or Loss for the year - - - i. Considered in Consolidation - - - ii. Not Considered in Consolidation - - -
1. Names of associates or joint ventures which are yet to commence operations. 2. Names of associates or joint ventures which have been liquidated or sold during the year.
Note: This Form is to be certified in the same manner in which the Balance Sheet is to be certified”.
CDSL | 23 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Annexure C PROFILE OF DIRECTOR WHO IS LIABLE TO RETIRE BY ROTATION AND SEEK REAPPOINTMENT AT THE ANNUAL GENERAL MEETING.
Shri Venkat Nageswar Chalasani
Shri Venkat, currently Deputy Managing Director (Global Markets) of State Bank of India, has over 32 years’ experience covering different aspects of banking and currently oversees the treasury portfolio of India’s largest bank, with significant exposure to various market segments including FX, money markets, equities and investments.
He has worked in various positions both in India and abroad, including postings in Bahrain, Bangalore and most recently Hong Kong, where he held the role of Regional Head (East Asia).
Shri Venkat is a Director on the boards of several companies and industry associations, has been a part of various RBI committees, and appears in print.
He is on the Board of CDSL since June 28, 2016.
24 | Annual Report 2017-18 Annexure D Form No. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED March 31, 2018 [Pursuant to section 204(1) of the Companies Act, 2013 and rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To, Takeovers) Regulations, as amended from The Members, time to time; Central Depository Services (India) Limited (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, We have conducted the secretarial audit of the as amended from time to time; compliance of applicable statutory provisions and the adherence to good corporate practices by Central (c) The Securities and Exchange Board of India Depository Services (India) Limited (hereinafter called (Issue of Capital and Disclosure Requirements) “the Company”). Secretarial Audit was conducted Regulations, 2009 and amendments from in a manner that provided us a reasonable basis time to time; for evaluating the corporate conducts/statutory (d) Securities and Exchange Board of India compliances and expressing our opinion thereon. (Depositories and Participants) Regulations, 1996 and amendments from time to time; Based on our verification of the Company’s books, (e) The Listing Agreements entered into by the papers, minute books, forms and returns filed and Company with the National Stock Exchange other records maintained by the Company and also of India Limited the information provided by the Company, its officers, agents and authorised representatives during the We have also examined compliance with the applicable conduct of secretarial audit, We hereby report that clauses of the following: in our opinion, the Company has, during the audit period covering the financial year ended on March 31, (i) Secretarial Standards issued by The Institute of 2018, complied with the statutory provisions listed Company Secretaries of India (SS-1 & SS-2) hereunder and also that the Company has proper (ii) The Securities and Board of India (Listing Board-processes and compliance mechanism in Obligations and Disclosure Requirements) place to the extent, in the manner and subject to the Regulations, 2015; reporting made hereinafter: We further report that We have examined the books, papers, minute books, The Board of Directors of the Company is duly forms and returns filed and other records maintained constituted with proper balance of Executive by the Company for the financial year ended on March Directors, Non-Executive Directors and Independent 31, 2018 according to the provisions of: Directors. The changes in the composition of the (i) The Companies Act, 2013 (the Act) and the rules Board of Directors that took place during the period made there under; under review were carried out in compliance with the provisions of the Act. (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; Adequate notice is given to all Directors to schedule (iii) The Depositories Act, 1996 and the Regulations the Board Meetings, agenda and detailed notes on and Bye-laws framed thereunder; agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further (iv) Foreign Exchange Management Act, 1999 and information and clarifications on the agenda items the rules and regulations made there under; (Not before the meeting and for meaningful participation Applicable) at the meeting. (5) The following Regulations and Guidelines During the period, all the decisions in the Board prescribed under the Securities and Exchange Meetings were passed with requisite majority. Board of India Act, 1992 (‘SEBI Act’):-
(a) The Securities and Exchange Board of India We have relied on the representation made by the (Substantial Acquisition of Shares and Company, its Officers and Reports of the Statutory
CDSL | 25 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Auditor for systems and mechanism framed by the and ensure compliance with applicable laws, rules, Company for compliances under other Acts, Laws and regulations and guidelines. Regulations applicable to the Company.
We further report that there are adequate systems We further report that during the audit period and processes in the Company commensurate with there were no specific events/ actions having a major the size and operations of the Company to monitor bearing on the Company’s affairs.
Pramod S. Shah & Associates (Practicing Company Secretaries)
Pramod S. Shah-Partner Pramod S. Shah & Associates Place : Mumbai FCS No.: 334 Date : 10/04/2018 C P No.: 3804
26 | Annual Report 2017-18 Annexure E
FORM NO. AOC.2 Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto (Pursuant to clause (h) of sub-section (3)of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
1. Details of contracts or arrangements or transactions not at arm’s length basis: NONE (a) (b) (c) (d) (e) (f) (g) (h) Name(s) of Nature of Duration of Salient Justification date(s) Amount Date on which the the related contracts/ the contracts/ terms of the for entering of paid as special resolution party and arrangements/ arrangements/ contracts or into such approval advances, was passed in nature of transactions transactions arrangements contracts or by the if any: general meeting relationship or transactions arrangements Board as required under including the or transactions first proviso to value, if any section 188
2. Details of material contracts or arrangement or transactions at arm’s length basis (a) (b) (c) (d) (e) (f) Name(s) of the related Nature of Duration of Salient terms of Date(s) of approval Amount party and nature of contracts/ the contracts/ the contracts or by the Board, if paid as relationship arrangements/ arrangements/ arrangements or any: advances, transactions transactions transactions including if any: the value, if any BSE Limited Issuer fee, On actual basis 3,84,69,097.00 (Up to 29/06/2017) Holding corporate action Company, charges and E-IPO (From 30/06/2017) Entity charges received having significant influence BSE Limited Rent/Office 01.10.15 to 1,73,63,475.00 (Up to 29/06/2017) Holding Maintenance 30.09.20 Company, expenses paid (From 30/06/2017) Entity having significant influence BSE Limited Municipal tax/ On actual basis 2,40,82,982.00 (Up to 29/06/2017) Holding electricity charges/ Company, leased line charges (From 30/06/2017) Entity / VSAT charges/ having significant influence director sitting fees of nominee directors etc. paid CDSL Ventures Limited Rent, As per board 2,74,26,011.00 MOU dt.16.07.11 Subsidiary Company administrative approval dt. /15.02.12 expenses /10.04.13/Board and salary approval dt. reimbursement 28.10.17 for rent. of employees on Salary on actual deputation received basis
CDSL | 27 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
(a) (b) (c) (d) (e) (f) Name(s) of the related Nature of Duration of Salient terms of Date(s) of approval Amount party and nature of contracts/ the contracts/ the contracts or by the Board, if paid as relationship arrangements/ arrangements/ arrangements or any: advances, transactions transactions transactions including if any: the value, if any CDSL Ventures Limited Evoting and salary As per board 8,26,650.00 Evoting fees as per Subsidiary Company reimbursement approval dt. Board approval of employees on 01.06.11. Salary on deputation paid actual basis CDSL Ventures Limited Computer On actual basis 15,30,740.00 Subsidiary Company Hardware sold CDSL Insurance Repository Rent, As per board 30,24,000.00 As per Board Limited administrative approval dt. approval dt. Subsidiary Company expenses 25.07.15/ and salary 28.10.17 reimbursement of employees on deputation received CDSL Commodity Repository Company formation On actual basis 2,32,60,000.00 Limited and other expenses Subsidiary Company receivable from subsidiary Marketplace Technologies Amount paid for On actual basis 15,71,993.00 Private Limited software licenses Subsidiary of entity having significant influence Marketplace Technologies Issuer fee and On actual basis 10,605.00 Private Limited corporate action Subsidiary of entity having charges received significant influence Indian Clearing Corporation Issuer and On actual basis 6,02,985.00 Limited depository Subsidiary of entity having participant charges significant influence received
28 | Annual Report 2017-18 Annexure F REPORT ON CORPORATE GOVERNANCE Company’s Philosophy on Code of Corporate Governance Corporate governance practices based on fairness, equity, accountability, transparency and commitment to ethical values have driven company’s business. The company has prescribed Code of Conduct and Ethics for its Directors and Key Management Personnel. It has also framed a policy which is applicable for all employees of the company preventing them from dealing with any price sensitive capital market related information whether authenticated or otherwise. The policies and business strategies of the company aim at providing secure and efficient depository services to investors within the prescribed legal framework. Business strategies are framed and implemented within compliance requirements.
Board of Directors a) Composition During the year under review, the Board of Directors of the Company had an optimum combination of both executive and non-executive Directors with at least one Woman Director. As per Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, currently there are nine non-executive Directors of which four are sponsor/shareholder Directors and five are independent/public interest Directors including the Chairman of the Board of the Company.
All the Directors have disclosed about their other Directorship and Membership on the Board Committees of other companies. Details of other Directorships and memberships on the Board Committees in other companies as on March 31, 2018 are as under: Name of the Director Category No. of No. of Board No. of Directorships Committee Chairmanships in in other memberships Board Committees companies in other companies of other companies Shri Taruvai Subbayya Non-Executive- 7 1 1 Krishna Murthy Independent Shri Aravamudan Non-Executive- 5 2 2 Krishnakumar Independent Shri Rajender Mohan Non-Executive- 7 3 1 Malla Independent Shri Bontha Prasada Non-Executive- 3 3 NIL Rao Independent Smt. Usha Narayanan Non-Executive- 1 NIL NIL Independent Shri Venkat Nageswar Non-Executive 6 Chalasani NIL NIL Shri Nehal Naleen Vora Non-Executive 7 NIL NIL Shri Nayan Mehta Non-Executive 7 NIL NIL Shri Kumarapuram Non-Executive 6 5 NIL Venkateswaran Subramanian Shri P.S.Reddy Managing 2 4 NIL Director & CEO b) Meetings and Attendance The Board meets at least once in a quarter inter alia to review the quarterly financial results and operations of the company. In addition, the Board also meets as and when necessary to address specific issues relating to the business. During the year, the Board met six times i.e. on April 24, 2017, June 6, 2017, June 23, 2017, July 29, 2017, October 28, 2017 and January, 20 2018
CDSL | 29 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Details of attendance of the Directors at the Board meetings and the last Annual General Meeting are given as under: Meeting Venue CDSL Board Room, 16th Floor, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001 CDSL Board Room, Marathon Futurex, 25th floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013 Board Meetings AGM Meeting date and April 24, June 6, June 23, July 29, Oct 28, Jan 20, May 29, time 2017 2017 2017 2017 2017 2018 2017 5.15 p.m 2.30 p.m 3.30 p.m 11.45 p.m 11.30 a.m 12.15 p.m 2.30 p.m Name of the Director Shri Taruvai P P P P P P P Subbayya Krishna Murthy Shri Aravamudan P P P P P P P Krishnakumar Shri Rajender P P P P P P P Mohan Malla Shri Bontha Prasada X P P P P P X Rao Smt. Usha NA P P P P P P Narayanan Shri Ananth X X P P NA NA NA Narayan Gopalakrishnan@ Shri Nehal Naleen P P P P P P P Vora Shri Venkat P X X X P P X Nageswar Chalasani Shri Nayan Mehta P P P P X P X Shri V. P NA NA NA NA NA NA Balasubramaniam* Shri Kumarapuram NA NA NA NA NA NA NA Venkateswaran Subramanian# Shri P.S.Reddy P P P P P P P Note: P- Present, X- Absent, NA-Not Applicable @ Shri Ananth Narayan Gopalakrishnan ceased to be shareholder Director vide his letter dated July 29, 2017 * Shri V. Balasubramaniam ceased to be shareholder Director w.e.f. April 24, 2017 # Shri Kumarapuram Venkateswaran Subramanian appointed as shareholder Director w.e.f. February 14, 2018 c. Board Procedures The Board meetings are conducted by the predetermined agenda. The Agenda alongwith the comprehensive notes and background material are circulated well in advance before each meeting to all Directors for facilitating effective discussion and decision making. The information as specified in and Regulation 17(7) read with Part A of Schedule II of SEBI (Listing Obligations & Disclosure Requirements) Regulations is regularly made available to the Board. The proceedings of the meetings of the Board and its Committees are recorded in the form of minutes and the draft minutes are circulated to the Board / Committee for perusal. The important decisions taken at the Board meetings are communicated to the concerned departments promptly.
30 | Annual Report 2017-18 d. Committees of the Board Terms of Reference of Audit There are six Committees of the Board, viz. Audit Committee: Committee, Nomination and Remuneration/ Powers of Audit Committee: Compensation Committee, Stakeholders Relationship and Securities Transfer Committee, 1. To investigate any activity within its Ethics Committee, Corporate Social Responsibility terms of reference. Committee. 2. To seek information from any employee. The Board decides terms of reference for these Committees. The minutes of the Committees are 3. To obtain outside legal or other placed before the Board on quarterly basis. The professional advice. details as to the composition, terms of reference, 4. To secure attendance of outsiders number of meetings and related attendance of with relevant expertise, if it these Committees are provided hereunder: considers necessary.
I. Audit Committee Role of Audit Committee: a) Composition of the Committee 1. Oversight of the company’s financial The Audit Committee consists of 7 reporting process and the disclosure non-executive Directors, out of which of its financial information to two third (5 independent Directors) are ensure that the financial statement independent/public interest Directors. is correct, sufficient and credible. The members on the Audit Committee possess expertise in the fields of finance, 2. Recommendation for appointment, accounting, banking and capital market. remuneration and terms of The Statutory Auditors, internal and appointment of auditors of the concurrent auditors and heads of Company. functional departments are permanent 3. Approval of payment to statutory invitees to the Audit Committee auditors for any other services meetings. The Company Secretary acts rendered by the statutory auditors. as the secretary to the Committee. 4. Review and monitor the auditor’s The scope of activities and terms of independence and performance, reference of the Audit Committee is as and effectiveness of audit process. set out in Regulation 18 read with Part C of schedule II of Securities Exchange 5. Reviewing, with the management, Board of India (Listing Obligations and the annual financial statements requirements) Regulations, 2015 along and the auditors’ report thereon, with Section 177 of the Companies before submission to the Board Act, 2013. The following Directors are for approval, with particular members of the Committee: reference to: 1. Shri Taruvai Subbayya Krishna a. matters required to be included Murthy (Chairman) in the Director’s Responsibility 2. Shri Aravamudan Krishnakumar Statement to be included in the Board’s report in terms of 3. Shri Rajender Mohan Malla clause (c) of sub-section 3 of 4. Shri Bontha Prasada Rao section 134 of the Companies 5. Smt. Usha Narayanan Act, 2013. b. changes, if any, in accounting 6. Shri Venkat Nageswar Chalasani policies and practices and 7. Shri Nayan Mehta reasons for the same.
CDSL | 31 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
c. major accounting entries the structure of the internal audit involving estimates based on department, staffing and seniority of the exercise of judgment by the official heading the department, management. reporting structure coverage and d. significant adjustments made frequency of internal audit. in the financial statements arising out of audit findings. 12. Discussion with internal auditors any significant findings and follow e. compliance with listing and up there on. other legal requirements relating to financial statements. 13. Reviewing the findings of any f. disclosure of any related party internal investigations by the transactions. internal auditors into matters g. qualifications in the draft audit where there is suspected fraud or report. irregularity or a failure of internal control systems of a material 6. Reviewing, with the management, nature and reporting the matter to the quarterly, financial statements the board. before submission to the board for approval. 14. Discussion with statutory auditors before the audit commences, about 7. To review the financial statements, the nature and scope of audit as in particular, the investments well as post-audit discussion to made by the unlisted subsidiary ascertain any area of concern. company. 15. To look into the reasons for 8. Reviewing, with the management, substantial defaults in the payment the statement of uses / application to the depositors, debenture of funds raised through an holders, shareholders (in case of issue (public issue, rights issue, nonpayment of declared dividends) preferential issue, etc.), the and creditors. statement of funds utilised for purposes other than those stated 16. To review the functioning of the in the offer document/ prospectus/ Whistle Blower Mechanism. notice and the report submitted by the monitoring agency monitoring 17. Approval of appointment of Chief the utilisation of proceeds of a Financial Officer (i.e., the whole- public or rights issue, and making time Finance Director or any other appropriate recommendations to person heading the finance function the Board to take up steps in this or discharging that function) matter. after assessing the qualifications, experience & background, etc. of 9. To formulate the scope, functioning, the candidate. periodicity and methodology for conducting the internal audit in 18. Valuation of undertakings or assets consultation with the Internal of the Company, wherever it is Auditor. necessary.
10. Reviewing with management, 19. Scrutiny of inter-corporate loans performance of statutory and and investments. internal auditors, and adequacy of the internal control systems. 20. Evaluation of internal financial controls and risk management 11. Reviewing the adequacy of internal systems. audit function, if any, including
32 | Annual Report 2017-18 21. Approval or any subsequent by the Audit Committee), modification of transactions of the submitted by management; company with related parties. c. Management letters / letters of internal control weaknesses 22. To appoint a person having such issued by the statutory qualifications and experience auditors; and registered as a valuer in such manner, on such terms and d. Internal audit reports relating conditions as may be prescribed and to internal control weaknesses; appointed by the audit committee e. The appointment, removal and for valuation, if required to be made, terms of remuneration of the in respect of any property, stocks, Chief internal auditor shall be shares, debentures, securities or subject to review by the Audit goodwill or any other assets or net Committee; and worth of a company or its liabilities. f. Statement of deviations in 23. To ensure proper system for storage, terms of the SEBI Listing retrieval, display or printout of Regulations: the electronic records as deemed i. quarterly statement of appropriate and such records shall deviation(s) including not be disposed of or rendered report of monitoring unusable, unless permitted by law. agency, if applicable, submitted to stock 24. To mandatorily review: exchange(s); and a. Management discussion and ii. annual statement of funds analysis of financial condition utilised for purposes and results of operations; other than those stated b. Statement of significant related in the offer document/ party transactions (as defined prospectus/notice.
c) Meetings and Attendance The Committee met four times during the year 2017-18 i.e. on April 24, 2017, July 29, 2017, October 28, 2017 and January 20, 2018. The record of attendance of the members of the Committee at these meetings is given hereunder:
Sr. Name of the member No. of meetings held No. of meetings No. during the tenure attended 1. Shri Taruvai Subbayya Krishna Murthy 4 4 2. Shri Aravamudan Krishnakumar 4 4 3. Shri Rajender Mohan Malla 4 4 4. Shri Bontha Prasada Rao 4 3 5. Smt. Usha Narayanan 3 3 6. Shri Venkat Nageswar Chalasani 4 3 7. Shri Nayan Mehta 2 1 8. Shri V. Balasubramaniam 1 1 Note: Shri V. Balasubramaniam ceased to be Director w.e.f. April 24, 2017 Shri Nayan Mehta was appointed on the Audit committee w.e.f. July 29, 2017 Smt. Usha Narayanan was appointed on the Audit committee w.e.f. April 24, 2017
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II. Nomination and Remuneration / and independence of a Director and Compensation Committee recommend to the Board a policy, The constitution of Nomination and relating to the remuneration for the Remuneration / Compensation Committee Directors, key managerial personnel is in compliance with the provisions of and other employees; the Companies Act, 2013. The following 2. Devising a policy on Board diversity; Directors are members of the Committee: 3. Formulation of criteria for evaluation of 1. Shri Aravamudan Krishnakumar performance of independent Directors (Chairman) and the board of Directors; 2. Shri Taruvai Subbayya Krishna Murthy 4. Identifying persons who are qualified to become Directors and who may be 3. Shri Rajender Mohan Malla appointed in senior management in 4. Shri Bontha Prasada Rao accordance with the criteria laid down and recommend to the board of Directors 5. Shri Venkat Nageswar Chalasani their appointment and removal ; and 6. Smt. Usha Narayanan 5. Whether to extend or continue the term 7. Shri Nayan Mehta of appointment of the appointment of the independent Director, on the basis Terms of reference for Nomination of the report of performance evaluation & Remuneration / Compensation of independent Directors. Committee The Committee met three times during the 1. Formulate the criteria for determining year 2017-18 i.e. on April 24, 2017, October qualifications, positive attributes 27, 2017 and January 11, 2018 The record of attendance of the members of the Nomination and Remuneration / Compensation Committee meeting is given hereunder: Sr. Name of the member No. of meetings held No. of meetings No. during the tenure attended 1 Shri Aravamudan Krishnakumar 3 3 2 Shri Taruvai Subbayya Krishna Murthy 3 3 3 Shri Rajender Mohan Malla 3 3 4 Shri Bontha Prasada Rao 3 2 5 Shri C. Venkat Nageswar 3 1 6 Smt. Usha Narayanan 2 1 7 Shri Nayan Mehta 2 1 8 Shri V. Balasubramaniam 1 1 9 Shri Anant Narayanan G. 1 0 Note : Shri V. Balasubramaniam ceased to be Director w.e.f. April 24, 2017. Shri Ananth Narayanan G ceased to be Director vide his letter dated July 29, 2017. Shri Nayan Mehta was appointed on the Committee w.e.f. July 29, 2017 Smt. Usha Narayanan was appointed on the Committee w.e.f. April 24, 2017
III Corporate Social Responsibility Committee : In view of the provisions of Section 135 of the Companies Act, 2013, your Company has formed a Corporate Social Responsibility Committee which is composed as under: 1. Shri Taruvai Subbayya Krishna Murthy (Chairman) 2. Shri Aravamudan Krishnakumar 3. Shri Bontha Prasada Rao 4. Smt. Usha Narayanan 5. Shri Nehal Naleen Vora
34 | Annual Report 2017-18 The Committee is responsible for identifying The Board at its meeting held on October eligible CSR projects/activities and 28, 2017 dissolved the Share Allotment and recommend to the Board expenditure to be Transfer Committee and IPO Committee incurred in this behalf and supervises the as the purpose of these Committees were end use of funds. served.
The Committee met once in the year 2017- IV) Meeting of Independent Directors (Public 2018 on January 11, 2018. Interest Directors) : During the year under review, the IV Stakeholders Relationship and Securities Independent Directors met two times i.e. Transfer Committee: on October 27, 2017 and March 22, 2018 The Stakeholders Relationship Committee to review the performance of the company was renamed and reconstituted on October and to exchange the views on critical issues. 28, 2017 as Stakeholders Relationship and The Committees at its meeting held on Securities Transfer Committee. March 22, 2018 carried out evaluation of the performance of non-independent Directors, The following Directors are members of Board as a whole and its Committee and the Committee: the Chairperson of the Company. All the 1. Shri Aravamudan Krishnakumar Independent Directors were present at the (Chairman) meeting.
2. Shri Bontha Prasada Rao Details of remuneration paid to the 3. Shri Nayan Mehta Directors 4. Shri P.S. Reddy Managing Director Currently the Board consists of only one Whole The Committee’s terms of reference Time Director viz. Shri P.S.Reddy, Managing includes: Director & CEO. The remuneration payable to him has been approved by the Nomination 1. Redressal of grievances of shareholders, and Remuneration/Compensation debenture holders and other security Committee, the Board, SEBI and holders. shareholders. The remuneration payable to 2. Consider and resolve the grievances of him is commensurate with the responsibility the security holders of the Company conferred upon him by the Board and scope including complaints related to transfer of his responsibilities. The Remuneration of shares, non-receipt of balance sheet, includes basic salary, performance linked non-receipt of annual report and non- incentive, other allowances, company’s receipt of declared dividends. contribution to provident fund and taxable value of perquisites. 3. Carry out any other function as prescribed under the Listing Non-Executive Directors: Regulations, the Companies Act and other Applicable Law. The non-executive Directors are paid remuneration by way of sitting fee. The 4. Demat, Remat, Transfer/ Transmission/ Company pays sitting fee of `60,000/- for Name Change/ Deletion/ Modification attending each Board meeting and `55,000/- of any Securities and its review. for attending each Committee meetings to the non-executive Directors. The Chairman The Committee met 3 times in the year 2017- is paid sitting fee of `75,000/- for attending 2018 on July 29, 2017, October 27, 2017 each Board meeting and `60,000/- for and January 11, 2018 attending each Committee meeting.
CDSL | 35 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Details of the sitting fees/remuneration paid to the Non-Executive Directors and Managing Director & CEO during the year under review are as under:
Name Shri Shri Shri Taruvai Subbayya Aravamudan Rajender Mohan Krishna Murthy Krishnakumar Malla Director Identification 00279767 00871792 00136657 Number Date of Birth 16.05.1940 18.11.1954 15.05.1953 Qualification Masters in Fiscal Studies B.A. (Economics) M.Com with an from the University of Delhi University and MBA from Faculty of Bath, U.K. Qualified Certified Management Studies, Associate of Indian University of Delhi and Institute of Bankers is also a Certificated Associate of the Indian Institute of Bankers. Salary (`) - - - Commission (`) - - - Sitting fee (`) 13,50,000 12,75,000 10,15,000 Other compensation - - - (`) Total (`) 13,50,000 12,75,000 10,15,000
Name Shri Smt. Shri Bontha Prasada Rao Usha Narayanan Venkat Nageswar Chalasani* Director Identification 01705080 07738036 07234179 Number Date of Birth 01.01.1954 05.06.1952 11.04.1961 Qualification Mechanical Engineering Master of Arts, Master Bachelor’s degree in Graduate from of Business Laws, science and a post Jawaharlal Nehru Bachelor of Laws, graduate diploma in Technological University, C.A.I.I.B, Diploma in journalism Kakinada, AP, India International Banking and a Post Graduate in Industrial Engineering from NITIE, Mumbai. Salary (`) - Commission (`) - Sitting fee (`) 8,45,000 5,85,000 3,60,000 Other compensation (`) Total (`) 8,45,000 5,85,000 3,60,000
36 | Annual Report 2017-18 Name Shri Shri Shri Nehal Naleen Vora* Nayan Mehta* Kumarapuram Venkateswaran Subramanian Director Identification 02769054 03320139 07842700 Number Date of Birth 11.08.1973 31.03.1967 23.09.1965 Qualification Commerce degree from Chartered Accountant Master’s Degree in Mumbai University and a as well as a Cost and Management and a MMS (Finance) Works Accountant Bachelor’s Degree Mumbai University in Mechanical Engineering. Salary (`) - - Commission (`) - Sitting fee (`) 2,10,000 7,80,000 - Other compensation (`) - Total (`) 2,10,000 7,80,000 -
Name Shri Shri Shri Ananth Narayan G # Balasubramaniam P.S.Reddy Venkataramani* Director Identification 05250681 00625701 01064530 Number Date of Birth 18.05.1969 30.07.1971 20.02.1963 Qualification B. Tech (Electrical M.Com B.A. (Economics), Engg.), (IIT) Mumbai (Mumbai University) (Andhra University, MBA, (IIM) Lucknow ICWAI Visakhapatnam) Certified Information M.A. (Economics), Systems Auditor (University of Hyderabad) Salary (`) - - 95,40,456 Commission (`) - - - Perquisites (`) - 39600 Sitting fee (`) - 1,30,000 - Provident Fund - - 7,23,060 Other compensation (`) - - 41,50,761 Total (`) - 1,30,000 1,44,53,877
Note: * Sitting Fees are paid to the Nominating Institutions. # Standard Chartered Bank does not wish to receive any sitting fees for the Board meetings attended by its Nominee Director on the Board. Shri Balasubramaniam Venkataramani ceased to be Director on the Board w.e.f. April 24, 2017 Shri Anant Narayan ceased to be Director on the Board w.e.f. July 29, 2017 @ Salary includes, sum total of Basic, HRA, MA, LTA, Leave Encashment paid during the year 2017-18. The Company has not granted any Stock Options to any of its Directors.
CDSL | 37 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Annual Evaluation by the Board of its own Directors and shareholder Directors), the performance and that of its Committees Board as a whole, its Committees and the and Individual Directors: Chairperson. Having regard to the industry, As required under section 178(2) of the size and nature of business your company Companies Act, 2013 and under Schedule is engaged in, the evaluation methodology IV to the Companies Act, 2013 on Code adopted is, in the opinion of the Board, of conduct for Independent Directors, a sufficient, appropriate and is found to be comprehensive exercise for evaluation of the serving the purpose. performances of every individual Director, the Board as a whole, its Committees Directors with materially significant, and the Chairperson of the Company has pecuniary or business relationship with been carried by your company during the the company: year under review as per the evaluation Notes to Financial Statements furnish the criteria approved by the Board and based transactions with related parties, as stipulated on guidelines given in Schedule IV to the under Indian Accounting Standards. Apart Companies Act, 2013. from the related party transactions mentioned in the notes, there are no transactions of For the purpose of carrying out performance material nature with the Directors which may evaluation exercise, five types of Evaluation have conflict of interest with the company. forms were devised in which the evaluating There is no pecuniary or business relationship authority has allotted appropriate ratings between the Non-executive Directors and the to the individual Director (Independent company.
General Body Meetings: Last three AGM details required and postal ballot details Meeting 17th Annual General 18th Annual General 19th Annual General number Meeting Meeting Meeting Day & Date Thursday, June 11, 2015 Wednesday, June 1, 2016 Monday, May 29, 2017 Time 3.15 p.m. 2.30 p.m. 2.30 p.m. Venue CDSL Board Room, 16th CDSL Board Room, 16th CDSL Board Room, 16th Floor, P.J. Towers, Dalal Floor, P.J. Towers, Dalal Floor, P.J. Towers, Dalal Street, Mumbai 400001. Street, Mumbai 400001. Street, Mumbai 400001. Book Closure - Nil - - Nil - - Nil - Payment of ` 2.20 per share i.e 22% ` 2.50 per share i.e 25% ` 3.00 per share i.e 30% Dividend
Dividend June 11, 2015 June 1, 2016 May 29, 2017 payment date No. of Special 1 1 - resolutions set out at the AGM
All special resolutions set out in the notices of the Annual General Meetings were passed by the shareholders by show of hands at the respective meetings with requisite majority.
38 | Annual Report 2017-18 Special Resolutions passed through Postal Ballot during 2017-18 During the FY 2017-18, the Company has passed the following special resolutions by postal ballot
Sr. Description Votes in favour of Votes against the No. resolution resolution No. of % of total No. of % of total votes votes votes votes 1 Nomination rights on the Board of Central 9613209 89.24 1158713 10.76 Depository Services (I) Ltd. (CDSL) 2 Divestment of shares in CDSL Commodity 10769523 99.97 3145 0.03 Repository Limited (CCRL) 3 Appointment of Shri K.V. Subramanian 10769334 99.97 2630 0.03 (DIN 07842700) as a Shareholder Director
In compliance with SEBI (LODR) Regulations • Beneficial Owners registered for CDSL’s and in compliance section 108 and 110 of SMS alert facility SMART are informed the Companies Act, 2013, and Rule 20 and about all debits and credits related 22 of the Companies (Management and to corporate actions and change in Administration) Rules, 2014, members were demographic details in their accounts provided with the facility to cast their votes by way of SMS. electronically through the e-Voting services • The website of the Company provided by M/s. Link Intime India Pvt. Ltd www.cdslindia.com acts as the primary on all resolutions set forth in the Notice. source of information regarding the Members were also given option to vote by operations of the Company. Important physical Ballot. developments in the depository, financial results and media releases The members, whose names appeared on are being displayed on the Company’s the Register of members/ List of Beneficial website www.cdslindia.com. Owners as on Friday, November 10, 2017 • ‘CDSL Infoline’, a bi-monthly publication were considered for voting and e-Voting was and e-Infoline, a monthly publication of open for voting from November 22, 2017 to the company, provides latest updates to December 21, 2017. the market participants.
The company had appointed Mrs. Dipti • Your Company also allows DPs to Mehta (CP No. 3202) failing her Mr. Atul submit BO Grievance Reports and Mehta (CP No. 2486), Practicing Company internal audit reports electronically. Secretaries, to act as the Scrutinisers for • The Company has 1,38,022 conducting the Postal Ballot / E-voting shareholders as on March 31, 2018. The process in accordance with the law and in a main channel of communication to the fair and transparent manner. The results of shareholders is through annual report Postal Ballot were declared on December 22, which includes inter alia, the Directors’ 2017. report, the Auditors’ report, Report on corporate governance, Audited financial Means of Communications: statements and other important information. The quarterly results of the • The company issues communiqués company are displayed on the website of to its depository participants and to NSE and CDSL as well as also published Registrar and Transfer Agents as and in newspapers. when necessary. • The Annual General Meeting is the • Beneficial Owners registered for CDSL’s principal forum for face-to-face internet services easi and easiest can communication with shareholders, view and monitor their accounts online where the Board responds to the specific as well as through Myeasi Mobile App. queries of the shareholders.
CDSL | 39 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Means of communication of results The quarterly, half yearly, nine monthly and annual results of the Company are intimated to the Stock Exchange immediately after they are approved by the Board and are published in the prescribed proforma within 48 hours of the conclusion of meeting of the Board in which they are considered, at least in one English newspaper circulating in the whole or substantially the whole of India and one in vernacular newspaper of the State of Maharashtra where the registered office of the Company is situated. Simultaneously these are displayed on website of the Company at www.cdslindia.com
During the FY 2017-18, financial results were published in the following newspapers as detailed below: Quarter ended Date of Board Date of Publication Name of the Newspaper Meeting June 30, 2017 July 29, 2017 July 31, 2017 Financial Express and Loksatta September 30, 2017 October 28, 2017 October 30, 2017 Financial Express and Loksatta December 31, 2017 January 20, 2018 January 22, 2018 Financial Express and Loksatta March 31, 2018 April 21, 2018 April 23, 2018 Financial Express and Loksatta
Presentation to Analysts: The Company arranged concalls with analysts on 4 occasions on August 2, 2017, October 31, 2017, January 22, 2018 and April 23, 2018. The transcripts of the said concalls are also submitted to the stock exchange and displayed on company’s website.
The corporate announcements made for any material events are submitted to the stock exchange and displayed on company’s website.
General Shareholder Information: Twentieth Annual General Meeting Day & Date August 20, 2018 Time 4.00 p.m. Venue Mini Theatre, 3rd Floor, P. L. Deshpande Maharashtra Kala Academy, Ravindra Natya Mandir, Near Shri Siddhivinayak Ganapati Mandir, Sayani Road, Prabhadevi, Mumbai – 400025. Book Closure August 12, 2018 Dividend payment date August 24, 2018
Financial Year: The company’s Financial Year commences from April 1 and ends on March 31 of the following year.
Listing on Stock Exchange The shares of the company got listed on the National Stock Exchange on June 30, 2017 with stock code- CDSL and listing fees have been paid to the stock exchange.
40 | Annual Report 2017-18 Market Price Data The monthly high and low market price of the shares and the quantities traded during the year 2017- 18 on NSE are as follows:
Month Months High Price Months Low Price No. of Shares (in Rs Per Share) (in Rs Per Share) Traded Jun-17 269.95 250 5,03,26,065 Jul-17 486 243.15 23,40,74,889 Aug-17 348 291.1 5,25,04,433 Sep-17 398.45 327 4,96,07,912 Oct-17 396.9 343.6 2,90,83,872 Nov-17 377.5 351 1,42,80,878 Dec-17 374 327.05 1,18,42,470 Jan-18 382 328.1 1,84,61,915 Feb-18 340.9 308.3 81,69,571 Mar-18 320 273.25 86,69,552
Performance of share price in comparison to Nifty
CDSL | 41 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Performance of share price in comparison to Nifty Midsmallcap 400
Performance of share price in comparison to Nifty smallcap 250
Registrar and Transfer Agent Share Transfer System: Link Intime India Private Limited is Registrar The share transfer forms received either by and Transfer Agent of your company. They the Company or its RTA are processed by can be communicated at: RTA and sent to the Company for approval. Link Intime India Pvt. Ltd The company has Stakeholders Relationship 247 Park, C-101, L.B.S. Marg, and Securities Transfer Committee which Vikhroli (West), Mumbai 400083. look after Demat, Remat, Transfer/ Email: [email protected] Transmission/ Name Change/ Deletion/ Modification of any Securities and its review. It has authorised MD & CEO and one Director to authorise transfer for speedy processing.
42 | Annual Report 2017-18 Distribution of shareholding as on March 31, 2018: Central Depository Services (India) Limited Distribution Of Shareholding (Shares) Report Type : ALL(NSDL+CDSL+Physical) Sr Shareholding of Shares Number of % of Total Shares % of Total No. Shareholders Shareholders Share Capital 1 1 to 500 131695 95.4159 11873023 11.3617 2 501 to 1000 3507 2.5409 2751466 2.633 3 1001 to 2000 1554 1.1259 2337736 2.2371 4 2001 to 3000 507 0.3673 1302848 1.2467 5 3001 to 4000 163 0.1181 584354 0.5592 6 4001 to 5000 148 0.1072 702700 0.6724 7 5001 to10000 240 0.1739 1780362 1.7037 8 10001 to 99999999999 208 0.1507 83167511 79.5861 TOTAL : 138022 100 104500000 100
Annual Report: Details of non-compliance(s) by the Annual Report containing, inter alia, Audited company: Accounts, Directors’ Report, Auditors’ Your company has complied with all the Report, Consolidated Financial Statements requirements of the Securities and Exchange and other related information is circulated Board of India (SEBI) on matters related to to all shareholders. The Management Capital Markets or any other matter, as Discussion and Analysis Report and the may be applicable from time to time. There Corporate Governance Report annexed to were no penalties imposed or strictures the Directors’ Report also forms part of the passed against the company by the statutory Annual Report. authorities in this regard.
Address for Correspondence: Compliance with mandatory requirements: Any query on Annual Report may be Your company has complied with all the addressed to Company Secretary at the mandatory requirements of the Code following address: of Corporate Governance (declaration Central Depository Services (India) Limited attached as Annexure-I) to the extent they are applicable to a depository. A certificate Email : [email protected] from M/s. Pramod S. Shah & Associates, Practicing Company Secretaries confirming Disclosures on materially significant the compliance of conditions of corporate related party transactions: governance as stipulated under Schedule Your Company has not entered into any V (E) of the SEBI (LODR) Regulations, is transaction of a material nature except annexed to the Directors’ Report and forms transactions with related parties which are part of the Annual Report. furnished under “Related Party Disclosure”. Your Company maintains the expenses The Company has adopted Policy for relating to the office of the non-executive Determining Material Subsidiaries and Policy Chairman and reimburses all the expenses on determining criteria for Related Party incurred in performance of his duties. All Transactions which have been displayed on the independent Directors of the company the website of the Company at following link possess the requisite qualifications and https://www.cdslindia.com/IPO/ experience which enable them to contribute GovernanceFramework_CG.html effectively to the company.
CDSL | 43 STATUTORY REPORTS - REPORT ON CORPORATE GOVERNANCE
Adoption of Discretionary Requirements with the Code of Ethics for Directors and The Company has adopted following Key Management Personnel as prescribed discretionary requirements as specified in under SEBI (Depositories and Participants) Part E of Schedule II of the SEBI (Listing (Amendment) Regulations, 2012, an Ethics Obligations and Disclosure Requirements) Committee has been constituted comprising Regulations, 2015 of Shri Taruvai Subbayya Krishna Murthy, Shri Aravamudan Krishnakumar, Shri Nehal Separate posts of Chairperson and Naleen Vora and Shri Bontha Prasada Rao Managing Director and Chief Executive and Smt. Usha Narayanan. The employees Officer can make Disclosures to the Ethics Committee regarding any malpractices or The posts of Chairperson and Managing event or activity that may have occurred Director and Chief Executive Officer of the in the organisation and which may be Company are different. The Chairperson considered as unethical or fraudulent. The is an independent Public Interest Director employees may, where the matters are of appointed by SEBI. grave nature, make Protected Disclosures directly to the Chairperson of the Ethics Reporting of internal auditor Committee. The internal auditor reports directly to the audit committee. Code of Conduct: The Board has laid down a Code of Conduct Audit Qualifications: for all Board members and Key Management During the period under review, there are Personnel of the Company. All Board no audit qualifications in the Company’s members and Key Management Personnel financial statements. The Company have affirmed compliance with the Code. continues to adopt the best practices to The declaration to this effect signed by Shri ensure a regime of unqualified financial P.S.Reddy, Managing Director and CEO statements. forms the part of this report.
Whistle Blower Policy: CEO / CFO Certificate: Your Company has adopted a Whistle Blower As required under Schedule V, Regulation Policy with an objective to provide employees 34(3) and 53(f) of Securities Exchange Board a framework and to establish a formal of India (Listing Obligation & Disclosure mechanism or process whereby concerns can be raised in line with the Company’s Requirement) Regulation, 2015 the CEO/ commitment to highest standards of ethical, CFO Certificate for the FY 2017-18 signed moral and legal business conduct and its by Shri P.S.Reddy, Managing Director & commitment to open communication. In CEO and Shri Bharat Sheth, Chief Financial accordance with the Policy and to comply Officer form part of the Annual Report.
For and on behalf of the Board
Taruvai Subbayya Krishna Murthy Place : Mumbai Chairman Date : April 21, 2018 (DIN: 00279767)
44 | Annual Report 2017-18 Declaration as required with respect to the Code of Conduct
The Company has obtained from all the members of the Board and Senior Management Personnel, affirmation(s) that they have complied with the Code of Conduct for Board Members and Senior Management Personnel in respect of the financial year ended March 31, 2018.
Place : Mumbai P.S.Reddy Date : April 21, 2018 Managing Director & CEO
CERTIFICATE ON CORPORATE GOVERNANCE Certificate on compliance with the conditions of Corporate Governance under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
To, The Members of Central Depository Services (India) Limited
We have examined the Compliance of conditions of Corporate Governance by Central Depository Services (India) Limited (“the Company”) for the year ended March 31, 2018 as stipulated in Regulations 17 to 27 & 46 and para C & D of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Compliance of conditions of Corporate Governance is the responsibility of the Management. This responsibility includes the design, implementation and maintenance of internal control and procedures to ensure compliance with the condition of the Corporate Governance stipulated in the Listing Regulations. Our responsibility is limited to examining the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in SEBI Listing Regulations as mentioned above.
We state that such Compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
For Pramod S. Shah & Associates Practising Company Secretaries
Pramod S. Shah- Partner Date : 10th April, 2018 Membership No. - 334 Place : Mumbai C.P. No. 3804
CDSL | 45 STATUTORY REPORTS - MANAGEMENT DISCUSSION AND ANALYSIS
Annexure G MANAGEMENT DISCUSSION AND ANALYSIS
INDIAN ECONOMY markets provide channels for allocation of savings Over the period from FY 2014-15 to FY 2017-18, India to investments and thereby decouple these two has witnessed close to 7.3% GDP growth, highest activities. As a result, the savers and investors are amongst the major world economies. The growth not constrained by their individual abilities, but by was achieved in an environment of low inflation, the economy’s abilities to invest and save respectively, improved current account balance and notable which inevitably enhances savings and investment in reduction in the fiscal deficit-to-GDP ratio, making the economy. This market has two inter-dependent the growth more creditable. After three successive and inseparable segments; the primary (new issues) years of robust GDP growth of over 7%, GDP and secondary (stock) markets. The primary market is growth has slowed down in FY 2017-18. However, concerned with the floatation of new issues of shares high optimism in domestic demand in the form of or bonds. The firm issues new securities to raise consumption and revival in small scale business, funds for investment/expansion plans or to reduce resulted in increased foreign direct investment (FDI) any obligations. The types of issue in the primary flows and leading to growth pickup. market include: an initial public offer (IPO); follow-on public offer (FPO); a rights offer where securities are Various reforms taken by the Government of India offered to existing shareholders; preferential issue/ have led to increase in India’s ranking in the World bonus issue/qualified institutional buyer placement; Bank’s Ease of Doing Business Index from 130 in or a composite issue (comprising a mixture of a rights 2017 to 100 in 2018. India is well equipped to overtake and public offer, or an offer for sale). China to be the fastest growing large economy in 2018 and the country’s equity market is likely to become The secondary market is to facilitate dealing in existing the fifth largest in the world. securities. This market provides both liquidity and marketability to such securities. It implies that it is Global growth is gathering pace and the momentum a market where a security can be bought or sold at in global trade is expected to continue in 2018 as small transaction cost. Spot market, futures market well, which should support India’s exports growth. and options market are also a part of the secondary As per World Bank’s projections, India’s GDP growth market. During FY 2017-18, the S&P BSE Sensex is expected to accelerate to 7.3% and 7.5% in FY opened at 29,737 and hit a high of 36,444 on January 2018-19 and FY 2019-20 respectively. While services 29, 2018 and thereafter closed at 32,969 on March will continue to remain the main driver of economic 28, 2018. During the same period, Nifty opened at growth, industrial activity is poised to grow, with 9,220 and hit a high of 11,172 on January 29, 2018 manufacturing expected to accelerate and agriculture and thereafter closed at 10,114 on March 28, 2018. likely to grow at its long-term average growth rate. Retail investors participated directly in the equity Recent policy reforms have helped India improve the market through Initial Public Offerings (IPOs) in larger business environment, ease of inflow of foreign direct numbers than in previous years. During FY 2017-18, investment and improved credit behaviour. due to favourable market conditions, the Primary Market has seen encouraging response from retail as (Source: IMF, CSO, World Bank) well as Institutional investors. As per Prime Database, 80 public issues have raised ` 98,947 crores in INDUSTRY OVERVIEW, TREND & ANALYSES FY 2017-18 as compared to 53 public issues mobilising Indian capital markets ` 36,615 crores in FY 2016-17. In capital market, business enterprises or government entities raise long-term funds by issuing equity or Depository Industry in India debt securities. The debt instruments typically have Depository is an institution registered with SEBI for more than one year maturity. holding custody of securities in electronic form and facilitates transfer based on the instructions from Securities market facilitates transfer of surplus the account holders. With growth in Indian capital resources from those with idle resources to others market, it became difficult to handle the growing who have a productive need for them. Securities volume of paper. This caused problems like delay in
46 | Annual Report 2017-18 transfers, long settlement period, high levels of failed (CDSL) was established following the implementation trade and bad deliveries, high-risk exposure etc. To of compulsory trading in dematerialised securities for remove these bottlenecks, The Depositories Act was all investors. legislated in August 1996. Accordingly, National Securities Depository Limited (NSDL) was established In terms of market share of demat accounts, CDSL in November 1996. Subsequently, three years later has experienced a growth in market share from 40% in 1999, Central Depository Services (India) Limited in FY 2013-14 to 46% in FY 2017-18.
The presence of depositories supports the capital in the world in 2017. The buoyancy in market was market growth in a variety of ways including substantial aided by easy availability of money globally, India’s reduction in bad deliveries, enhanced liquidity of improving economic fundamentals, the government’s securities, reduction in transaction cost, eliminates demonstration of its serious intent for economic problems relating to change of address of investors, reforms, signs of a turnaround in corporate earnings transmission etc., makes faster disbursement of and state poll results favouring the ruling BJP-led non cash corporate benefits like rights, bonus, etc. alliance. As per Morgan Stanley, within the Asian possible, faster settlement cycle, no stamp duty on region, India’s equity market is expected to grow transfer of shares, eliminates problems relating to fastest among the major markets at 10.1% CAGR, selling securities on behalf of a minor etc. reaching USD 6.1 trillion by 2027.
Factors driving growth of depositories Initial Public Offerings: Capital raised from equity Business of depositories grows in direct proportion to markets has gone up 3.46 times compared to the growth in capital markets. The past three-to-four years previous year. According to Prime Database, 2017-18 have witnessed a steady structural shift of savings was the best year ever for the IPO market. The total from physical assets such as real-estate and gold into equity capital raised during FY 2017–18 was about financial assets. The prevailing positive real interest ` 1,77,116 crores as against about `51,120 crores rates should enable this trend to continue. Within raised during FY 2016–17. This reflects the country’s financial assets, the allocation towards equities has economic strength and rising investor appetite. IPO been increasing due to the relatively higher return boom is likely to continue in India led by the resilient as well as low base; given the retail investor has nature of the economy, strong domestic liquidity traditionally been under-invested in equities. and divestment of state-owned enterprises. The IPO pipeline is healthy with dozens of companies looking Equity market: According to a Sanctum Wealth to go public later this year. The divestment of state- Management report, Indian equity market will become owned enterprises by the Government is also likely the fifth largest in the world in 2018. The Indian to propel IPO activity in the country. More than 100 market rallied to be one of the top performing ones small and medium enterprises (SMEs) are expected to list on the SME platform this year.
CDSL | 47 STATUTORY REPORTS - MANAGEMENT DISCUSSION AND ANALYSIS
Increase in trading volumes and retail convert the physical shares issued by issuer participation: CDSL has experienced a substantial companies into electronic mode through the growth in the number of companies trading in demat DP. An investor can transfer securities from form from 541 in FY 1999-00 to 10,950 in FY 2017- his account to any account by submitting the 18, a growth of 19% CAGR. The active participation of delivery instruction slip to the DP retail investors was demonstrated with the increase in • Issuer companies: A wide range of securities the turnover of shares traded on the BSE rising from including equity shares, preference shares, ` 5.21 lakh crores in FY 2013-14, to ` 0.82 lakh crore mutual fund units, debt instruments, government in FY 2017-18, while trading on the NSE increased securities are available for dematerialisation in from ` 28.08 lakh crore in FY 2013-14, to ` 140.44 CDSL. CDSL enables issuer companies to credit lakh crore in FY 2017-18. securities including non-cash corporate benefits to a shareholder’s or applicants demat account BUSINESS OVERVIEW Central Depository Services (India) Limited (hereafter • Capital market intermediaries: Through referred to as CDSL / the Company) was initially its wholly-owned subsidiary, CDSL Ventures promoted by BSE Ltd. which had thereafter divested Limited, the Company offers KYC services in respect of investors in Indian capital markets its stake to leading banks. CDSL has received the certificate of commencement of business from SEBI in • Insurance Companies: Through its subsidiary, February, 1999. All leading stock exchanges like the CDSL Insurance Repository Limited, the BSE Ltd, National Stock Exchange and Metropolitan Company offers facilities for holding of insurance Stock Exchange of India have established connectivity policies in electronic form with CDSL. The Company strives to provide • Others: CDSL offers other online services convenient, dependable and secure depository such as e-voting, e-Locker, National Academy services at affordable cost to all market participants. Depository, easi (Electronic Access to Security Information), easiest (Electronic Access to The Company’s subsidiary, CDSL Ventures Limited Securities Information and Execution of Secured (CVL) is registered with the SEBI and the Unique Transaction) and mobile application (myeasi, Identification Authority of India, and undertakes m-voting). Investor meetings and other awareness common Know Your Client services for investors in the programmes are regularly conducted by CDSL capital markets including the mutual fund industry. REVENUE STREAMS Through CDSL Insurance Repository Limited, The Company offers services to several sub-sectors another subsidiary, the Company has arrangements of the Indian securities and financial services with several life insurance companies and three market including capital markets, mutual funds general insurance companies for holding policies in and insurance companies. The Company has high electronic form and enabling the policy holders to stability of operating income from the fixed annual undertake changes, modifications and revisions to charges collected from the registered companies and insurance policies. transaction-based fees collected from Depository Participants. Transaction charges are levied by Central Commodity Repository Limited (CCRL) is the depositories, subject to prior approval of SEBI. another subsidiary, to establish and run a Commodity The Company offers dematerialisation for a wide Repository on the lines of a Securities Depository. spectrum of securities including equity shares, In this regard, Warehousing Development and preference shares and bonds of public (listed and Regulatory Authority (WDRA) has shortlisted CCRL unlisted) and private companies, units of mutual as one of the two Repositories for undertaking the funds, government securities, commercial papers Commodity Repository activity. and certificates of deposits. The Company also CLIENTELE charges account maintenance charges to corporate account holders and monthly maintenance CDSL’s clientele can be broadly classified into five charges to clearing members for maintenance of main categories namely: settlement accounts. • Depository Participants (DPs): An investor opens an account through the agent of Other consistent revenue-generating services offered depository known as Depository Participant. by the Company include e-notices and e-voting After opening the account, the investor can services to the registered companies enabling their
48 | Annual Report 2017-18 shareholders to receive notices in electronic form and to allow shareholders to cast their votes electronically, remotely or at the meeting venue. Additionally, new revenue streams like National Academic Depository and eKYC are gaining momentum though they will take some time to contribute meaningfully.
Distribution of Revenue Sources (Consolidated)
(Source: Company)
Depository Participant Network among the corporate sector and entrepreneurs due The Company is the leading securities depository in to higher valuations, easing of IPO processes, Offer India by incremental growth of Beneficial Owner (BO) for sale etc. The Central Government has also been accounts of over 40.50 Lakhs from FY 2015-16 to able to push through divestment by OFS (Offer FY 2017-18. Further, the total number of registered for Sale) and innovative structuring of Exchange Depository Participants (DPs) is 594 at the end of FY Traded Funds (ETFs). 2017-18. As on March 31, 2018, CDSL had over 14.8 million investor accounts (excluding closed accounts). Increase in Capital market participation by retail investors The Company has a wide network of DPs, who act as After conceding its position as the fastest growing points of service. CDSL had 594 registered DPs with major economy to China for a year in 2017, India is over 17,000 service centres across India. The DPs are likely to reclaim the position in 2018. In all likelihood, spread across 29 states and 7 union territories. India is going to register higher growth rate than other major emerging market economies in the next As on March 31, 2018, CDSL had over 283 billion decade. India’s demographic dividend, growth in per securities representing a total value of ` 19.8 trillion. capita income and savings, along with government initiatives will give a boost to retail participation in the OPPORTUNITIES & OUTLOOK capital markets. India also has the largest population Growth Drivers of youth population with more than 50% of current population below the age of 25 and over 65% below Buoyant markets the age of 35. This youth and larger working class The evolution of Indian capital markets has made it are expected to increase the amount of investments, a preferred investment destination even for overseas which may result in growth for depositories. There has investors. The steps taken by Central Government, been a steady growth in per capita income which in confidence in growth potential and business turn is likely to result in increased disposable income. environment, stable political climate are some of the favourable factors. Investors (domestic, retail, HNI OUTLOOK and international), Mutual funds, Private Equities Corporates in India are the most direct beneficiaries of and Pension/Sovereign funds are keener than ever the structural reforms and increase in e-commerce, to participate in Indian capital markets. There is a consumption growth, financial products and significant euphoria about Indian capital markets investments which could make India a significant
CDSL | 49 STATUTORY REPORTS - MANAGEMENT DISCUSSION AND ANALYSIS
market for corporations worldwide. Recent FINANCIAL PERFORMANCE (Consolidated) measures to digitise the economy and improve tax Revenue from operations includes transaction compliance should boost tax revenue in the medium charges, account maintenance charges and term. Boost from government for digitalisation will settlement charges paid by DPs and annual fees, also help CDSL to promote online demat account corporate action charges and e-voting charges paid by opening. Promotion of paperless account will also companies and KYC charges paid by intermediaries. help brokers to reduce cost and offer more efficient The Company clocked revenue of ` 19,102.44 Lakhs services to demat account holders. in FY 2017-18 as against ` 14,600.13 Lakhs in FY 2016-17, up 31%. As compared to the previous According to Prime Database, FY 2018-19 is likely year, annual issuer charges increased by 8%, to see more volatility in the secondary market which transaction charges increased by 41%, IPO corporate shall affect fund raising plans of companies as well. action charges increased by 79% and online data While there are 12 companies holding SEBI approval charges that is from the KYC income increased by ` wanting to raise over 10,395 crore and another 18 56%. The robust increase in revenues is attributable ` companies wanting to raise about 29,282 crore to good financial market conditions. Additionally, new awaiting SEBI approval, as we have seen in the past, revenue streams like National Academic Depository, this pipeline may quickly vanish if the volatility and eKYC have started flowing in though they will take negative sentiment continues. some time to contribute meaningfully.
VALUE ADDED SERVICE OFFERINGS CDSL’s main costs are employee wages and benefits, The Company has ventured into value added software development and maintenance costs, businesses in the form of GST Suvidha provider, which are largely fixed in nature. Total expenditure the national academic depository and e-sign. These in FY 2017-18 stood at ` 8,425.81 Lakhs, up 20% offerings will boost revenues in a gradual manner. as compared to the previous year. Other expense is In addition, the Company is looking to add newer up 13% as compared to previous year mainly due to services to contribute the future growth. The Company eCAS charges and leased line charges. eCAS is the is working to provide a single demat account for all consolidated account statement that the Company financial assets where an investor can access all the sends out to clients, on which additional postage and details of their investments on a common platform. communication charges are incurred. This is envisaged as a one-stop account for all financial investments including pension funds, fixed EBITDA improved to ` 14,836.34 Lakhs in FY 2017-18 deposits, life insurance policies, etc. as against ` 12,026.88 Lakhs in FY 2016-17 leading to 138 bps EBITDA margin expansion to 66% INFORMATION TECHNOLOGY due to strong operating leverage. PAT improved to CDSL boasts of having state-of-the-art IT systems with ` 10,363.83 Lakhs, up 20% over the previous year. global accreditation. The Company’s core depository system is based on a centralised architecture which The net worth of the Company stood at ` 61,470 Lakhs helps to provide real-time updated information to as on March 31, 2018 as compared to ` 54,881 Lakhs users. The system can be accessed over the internet as on March 31, 2017. The cash flow from operations and the intranet though a secure channel using multi- stood at ` 11,783.42 Lakhs during FY 2017-2018. factor user authentication. The Company has deployed There is net cash from operations of ` 7,880.47 Lakhs state-of-the-art server hardware, enterprise flash as on March 31, 2018. storages and highly resilient network infrastructure. RISK MANAGEMENT CDSL has been certified for ISO 27001 for its Strict internal processes and controls enable the Information Security Management System. It protects Company to effectively manage the business risks information throughout the life span, from its initial it encounters on daily basis. The Company’s risk creation to its final disposal. CDSL infrastructure has management framework includes risk management multiple back-up levels which includes a redundant policy as devised by the Risk Management Committee fail-over cluster and a seamless switchover to the (RMC). The Committee monitors and identifies risks Disaster Recovery System (DRS). The DRS is located at regular intervals to improve standard operating at a different seismic zone. The Company has been procedures and to set appropriate risk limits and awarded ISO 22301:2012 certification for its Business controls. Risk management policies and systems Continuity Management System. are reviewed regularly to reflect changes in market
50 | Annual Report 2017-18 conditions and business activities, with any new 2) The policies and procedures are designed to activity or deviation from existing procedure referred provide reasonable assurance that transactions to the RMC. The Company’s risk management are recorded as necessary to permit preparation of system covers various aspects of the business. The financial statement in accordance with generally Company also has in place a special contingency accepted accounting principles and Indian insurance policy to cover risks associated with Accounting Standards (IAS), and that receipts depository operations which covers the Company and expenditures of the Company are being and registered DPs. made only in accordance with authorisations of management and director of the Company and The Company also ensures that its clients comply 3) Company has aligned its current systems with applicable regulatory provisions. The Company with the requirement of the Companies Act, conducts regular inspections of both DPs and RTAs 2013 on the lines of the globally accepted risk and provides compliance training across the country based framework as issued by the Committee for DPs. In addition to the bi-annual internal audits, of Sponsoring Organisations (COSO) of the the Company has made it mandatory for all registered Treadway Commission, so as to provide DPs to appoint independent chartered accountant reasonable assurance regarding prevention or firms to conduct concurrent audits of risk prone timely detection of unauthorised acquisition, use areas. or disposition of the company’s assets that could have a material effect of the financial statement. Internal Financial Control Systems and their Adequacy During the year, such internal controls over financial Internal Financial Control Systems and their reporting were tested by management, internal adequacy means the policies and procedures adopted auditors and statutory auditors. No reportable by the Company for ensuring the orderly and efficient material weakness in design and effectiveness was conduct of its business, including adherence to observed. Company’s policies, safeguarding of its assets, the prevention and detection of frauds and errors, the DISCLAIMER accuracy and completeness of the accounting records, Statements in the Annual Report, including those and the timely preparation of reliable financial which relate to Management Discussion and Analysis, information. describing the Company’s objectives, projections, estimates and expectations, may constitute ‘forward The Company had already developed and implemented looking statements’ within the meaning of applicable a framework for ensuring internal controls over laws and regulations. Although the expectations are financial reporting. This framework includes entity based on reasonable assumptions, the actual results level policies, process and operating level standard might differ. operating procedures.
Some significant features of our Internal Financial Control System are: 1) Adequate documentation and maintenance of the records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
CDSL | 51 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Annexure H Details pertaining to remuneration as required under section 197(12) of the Companies Act 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SEBI (Depositories and Participants)(Amendment) Regulations 2012
1. The ratio of the remuneration of MD & CEO to the median remuneration of the employees of the company for FY 2017-18 is 15.62:1
2. The remuneration of MD & CEO and CFO was increased by 27.56% and 38.45% respectively during the financial year. Shri. Pavan Kumar, VP-Legal and Group Company Secretary and Compliance officer resigned from the Company w.e.f. July 31, 2017 and Shri Amol Purandare, AVP-Legal and Company Secretary was appointed w.e.f. August 7, 2017. Mr. Amol Purandare has resigned w.e.f. June 26, 2018. As such, increase in remuneration of these officials could not be provided.
3. In the financial year, there was an increase of 18.02% in the median remuneration of employees.
4. There were 204 employees on the rolls of the company as on March 31, 2018.
5. There has been 22.25 percentile increase in the salaries of employees other than the managerial remuneration in the last financial year and there has been 33.01 percentile increase in the managerial remuneration in the last financial year. Percentile increase in managerial remuneration is more than percentile increase in the salaries of other employees because Managerial Personnel’s remuneration includes performance linked bonus which is a major component.
6. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other employees.
7. Information as per section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
Name Age Qualification Designation Remuneration Experience Date of Last in received (No. of commencement employment & years (`) years) of employment designation Shri 55 M.A. MD & CEO 1,44,14,277 30 November 8, BSE P.S.Reddy 2006 Chief General Manager – Surveillance & Inspection Shri. 58 MS Executive 1,06,89,546 36 July 7, 2014 CIO Advisory & Joydeep (Computer Director and IT Consultant Dutta Science), B.E Group CTO
Notes: 1. Remuneration includes basic salary, performance linked incentive, other allowances, company’s contribution to provident fund and taxable value of perquisites. 2. Nature of employment in all cases is contractual in accordance with their respective employment terms and Company’s Service Rules. 3. None of the above is covered under Rule 5(3)(viii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 4. None of the above is a relative of any Director or manager of the Company.
52 | Annual Report 2017-18 CEO AND CFO CERTIFICATE
To the Board of Directors Central Depository Services (India) Ltd.
We, P.S.Reddy, Managing Director & CEO and Bharat Sheth, Chief Financial Officer certify that:
(a) We have reviewed financial statements for the year ended March 31, 2018 and that to the best of our knowledge and belief : i. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. these statements together present a true and fair view of the Company’s affairs and are in compliance with existing Accounting Standards, applicable laws and regulations.
(b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct.
(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.
(d) We have indicated to the Auditors and the Audit Committee that - i. there have not been any significant changes in internal control over financial reporting during the year under reference; ii. there have not been a significant change in accounting policy during the year requiring disclosure in the notes to the financial statements; and iii. there have not been any instances during the year of significant fraud of which we had become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting.
P.S.Reddy Bharat Sheth Managing Director & CEO Chief Financial Officer Place : Mumbai Date : April 21, 2018
CDSL | 53 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Annexure I MGT - 9 EXTRACT OF ANNUAL RETURN
I. REGISTRATION AND OTHER DETAILS i) CIN:- L67120MH1997PLC112443 ii) Registration Date – 12/12/1997 iii) Name of the Company - Central Depository Services (India) Limited iv) Category / Sub-Category of the Company Company having Share capital v) Address of the Registered office and contact Central Depository Services (India) Ltd. details Marathon Futurex, 25th floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013. vi) Whether listed company Yes vii) Name , Address and Contact details of Registrar Link Intime India Pvt. Ltd and Transfer Agen, if any 247 Park, C-101, L.B.S. Marg Vikhroli (West), Mumbai 400083.
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10 % or more of the total turnover of the company shall be stated:
Sl. Name and Description of main NIC Code of the % to total turnover No. products / services Product/ service of the compnay 1 Depository Services 64990 86%
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES- Sl. NAME AND ADDRESS OF CIN/GLN HOLDING/ % of Applicable No THE COMPANY SUBSIDIARY/ shares Section ASSOCIATE held held 1 CDSL Ventures Ltd U93090MH2006PLC164885 Subsidiary 100 2(87) of the Marathon Futurex, 25th Companies floor, A-Wing, Mafatlal Act, 2013 Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013. 2 CDSL Insurance Repository U74120MH2011PLC219665 Subsidiary 51 2(87) of the Limited Companies Marathon Futurex, 25th Act, 2013 floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013. 3 CDSL Commodity U74999MH2017PLC292113 Subsidiary 100 2(87) of the Repository Limited Companies Marathon Futurex, 25th Act, 2013 floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013.
54 | Annual Report 2017-18 IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) i) Category-wise Share Holding Category of Share holders No. of Shares held at the beginning of the No. of Shares held at the end of the year % year 01.04.2017 31.03.2018 Change Demat Physical Total % of Demat Physical Total % of during total total the shares shares year A. Promoters (1) Indian a) Individual/HUF - - - - - b) Central Govt - - - - - c) State Govt (s) - - - - - d) Bodies Corp. 52,297,850 52,297,850 50.05 25,080,000 - 25,080,000 24.00 -26.05 e) Banks / FI - - - - - f) Any Other…. - - - - - Sub-total (A) (1):- 52,297,850 - 52,297,850 50.05 25,080,000 - 25,080,000 24.00 -26.05 (2) Foreign a) NRIs - Individuals - - - - - b) Other – Individuals - - - - - c) Bodies Corp. - - - - - d) Banks / FI - - - - - a) Any Other…. - - - - - Sub-total (A) (2):------Total shareholding of 52,297,850 - 52,297,850 50.05 25,080,000 - 25,080,000 24.00 -26.05 Promoter (A) = (A)(1)+(A) (2) B. Public Shareholding 1. Institutions a) Mutual Funds - - 4,876,076 - 4,876,076 4.67 4.67 b) Banks / FI 46,864,600 46,864,600 44.85 37,069,625 37,069,625 35.47 -9.37 c) Central Govt - - - - - d) State Govt(s) - - - - - e) Venture Capital - - - - - Funds f) Insurance 4,336,750 4,336,750 4.15 - - - - -4.15 Companies g) FIIs - - 2,292,865 2,292,865 2.19 2.19 h) Foreign Venture - - - - - Capital Funds i) Others (specify) 1,000,000 1,000,000 0.96 8,175,333 8,175,333 7.82 6.87 Sub-total (B)(1):- 52,201,350 - 52,201,350 49.95 52,413,899 - 52,413,899 50.16 0.20
CDSL | 55 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
Category of Share holders No. of Shares held at the beginning of the No. of Shares held at the end of the year % year 01.04.2017 31.03.2018 Change Demat Physical Total % of Demat Physical Total % of during total total the shares shares year 2. Non-Institutions a) Bodies Corp. - - i) Indian 800 800 0.00 - - -0.00 ii) Overseas - - - - - b) Individuals - - - - - i) Individual - - 18,265,316 510 18,265,826 17.48 17.48 shareholders holding nominal share capital upto ` 1 lakh ii) Individual - - 1,835,637 1,835,637 1.76 1.76 shareholders holding nominal share capital in excess of Rs 1 lakh c) Others (specify) - 6,904,638 6,904,638 6.61 6.61 Sub-total (B)(2):- 800 - 800 0 27,005,591 510 27,006,101 25.84 25.84 Total Public Shareholding 52,202,150 - 52,202,150 49.95 79,419,490 510 79,420,000 76.00 26.05 (B)=(B)(1)+ (B)(2) C. Shares held by - - - - Custodian for GDRs & ADRs Grand Total (A+B+C) 104,500,000 - 104,500,000 100.00 104,499,490 510 104,500,000 100.00 -
(ii) Shareholding of Promoters Sr Shareholders Shareholding at the beginning Share holding at the end of the No Name of the year 01-04-2017 year 31.03.2018 No of % of %of Shares No of % of %of Shares % change in Shares total Pledged / Shares total Pledged / share shares of encumbered shares of encumbered holding company to total company to total during the shares shares year 1 BSE Ltd. 5,22,97,850 50.05 0 25080000 24 0 -26.05
(iii) Change in Promoters’ Shareholding ( please specify, if there is no change) Sr Shareholding at the Cumulative Shareholding No beginning of the year during the year No. of shares % of total No. of shares % of total held on shares of the held on shares of the 01.04.2017 company 31.03.2018 company At the beginning of the year 52,297,850 50.05 52,297,850 50.05 Decrease due to offer for sale on 27,217,850 -26.05 27,217,850 -26.05 June 30, 2017 At the End of the year 25,080,000 24.00 25,080,000 24.00
56 | Annual Report 2017-18 IV. Shareholding Pattern of Top Ten Shareholders Sr Name & Type of Shareholding at the Cumulative Shareholding at No. Transaction beginning of the year Transactions during the end of the year - 01.04.2017 the year 31.03.2018 No.Of % Of Total Date Of No. Of No Of % Of Total Shares Shares Transaction Shares Shares Shares Held Of The Held Of The Company Company 1 Standard Chartered 7500000 7.18 7500000 7.18 Bank - Corporate Banking At The End Of The Year 7500000 7.18 2 HDFC Bank Ltd. 7500000 7.18 7500000 7.18 At The End Of The Year 7500000 7.18 3 Canara Bank 6744600 6.45 6744600 6.45 At The End Of The Year 6744600 6.45 4 Bank Of India 5820000 5.57 5820000 5.57 At The End Of The Year 5820000 5.57 5 State Bank Of India 10000000 9.57 10000000 9.57 Market Sell 30 Jun 2017 4775000 5225000 5.00 At The End Of The Year 5225000 5.00 6 Life Insurance 4336750 4.15 4336750 4.15 Corporation Of India At The End Of The Year 4336750 4.15 7 Bank Of Baroda 5300000 5.07 5300000 5.07 Market Sell 30 Jun 2017 2174358 3125642 2.99 At The End Of The Year 3125642 2.99 8 L&T Mutual Fund 0 0.00 0 0.00 Trustee Limited-L&T Emerging Businesses Fund Market Purchase 30 Jun 2017 60869 60869 0.06 Market Sell 07 Jul 2017 -60869 0 0.00 Market Purchase 03 Nov 2017 300000 300000 0.29 Market Purchase 10 Nov 2017 250000 550000 0.53 Market Purchase 24 Nov 2017 120000 670000 0.64 Market Purchase 01 Dec 2017 116538 786538 0.75 Market Purchase 08 Dec 2017 285562 1072100 1.03 Market Purchase 15 Dec 2017 148129 1220229 1.17 Market Purchase 05 Jan 2018 100871 1321100 1.26 Market Purchase 19 Jan 2018 173333 1494433 1.43 Market Purchase 26 Jan 2018 82794 1577227 1.51 Market Purchase 02 Feb 2018 17206 1594433 1.53 Market Purchase 09 Feb 2018 255171 1849604 1.77 Market Purchase 23 Feb 2018 25000 1874604 1.79 Market Purchase 09 Mar 2018 120000 1994604 1.91 Market Purchase 16 Mar 2018 39431 2034035 1.95 Market Purchase 23 Mar 2018 30569 2064604 1.98 At The End Of The Year 2064604 1.98 9 Bank Of Maharashtra 2000000 1.91 2000000 1.91 At The End Of The Year 2000000 1.91 10 Union Bank Of India 2000000 1.91 2000000 1.91 At The End Of The Year 2000000 1.91
CDSL | 57 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
(v) Shareholding of Directors and Key Managerial Personnel- Shri Bharat Sheth-Chief Financial Officer: Sr Shareholding at the Cumulative Shareholding No beginning of the year during the year No. of % of total No. of % of total shares shares of the shares shares of the company company At the beginning of the year NIL NIL 2690 Negligible Date wise Increase / Decrease in Promoters Share holding during the year specifying the reasons 29.06.2017 via IPO allotment for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc): At the End of the year NIL NIL Negligible
V. INDEBTEDNESS Secured Loans Unsecured Deposits Total excluding deposits Loans Indebtedness Indebtedness at the beginning of the financial year i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due Total (i+ii+iii) Change in Indebtedness during NIL the financial year Addition Reduction Net Change Indebtedness at the end of the financial year i) Principal Amount ii) Interest due but not paid iii) Interest accrued but not due
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and/or Manager: Sr. Particulars of Remuneration P. S. Reddy Total No. (MD & CEO) Amount 1 Gross salary (a) Salary as per provisions contained in section 17(1) of the 9,540,456 9,540,456 Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) Income-tax Act, 1961 39,600 39,600 (c) Profits in lieu of salary under section 17(3) Income-tax 0 Act, 1961 2 Stock Option 0 3 Sweat Equity 0 4 Commission 0 - as % of profit 0 - others, specify… 0 5 Others, please specify 4,150,761 4,150,761 Total (A) 13,730,817 13,730,817 Ceiling as per the Act (` In lacs) 511.47
58 | Annual Report 2017-18
Total 5070000 1480000 Amount 5070000 1480000 6550000 0 0 0 Shri K.V. Subramanian Shri 360000 360000 360000 C.Venkat Nageswar Shri 780000 Nayan Mehta Mehta 780000 780000 130000 130000 130000 Shri V. Balasubramaniam Shri Vora Nehal 210000 210000 210000 0 0 Shri Ananth Narayan Name of Directors 585000 585000 585000 Smt. Usha Narayanan 845000 Rao Shri 845000 845000 B.Prasada Shri R.M. Malla 1015000 1015000 1015000 1275000 1275000 1275000 Shri A Krishnakumar Murthy 1350000 Krishna 1350000 1350000 Shri T.S. Fee for Commission Others, please attending board / committee meetings specify attending board / committee meetings specify - Fee for - Commission - Others, please • • • Directors Executive Directors Particulars of Remuneration 3. Independent Total (1) 4. Other Non- Total (2) Total (B)=(1+2) Total Managerial Remuneration Overall Ceiling as per the Act Sr. no. Remuneration to other directors: B.
CDSL | 59 STATUTORY REPORTS - BOARD OF DIRECTORS’ REPORT
C. Remuneration To Key Managerial Personnel Other Then MD/ MANAGER/ WTD Sl. Particulars of Remuneration Key Managerial Personnel Total No. Shri Bharat Shri. N.V.S Shri Amol Sheth Pavan Kumar Purandare 1. Gross salary 7,022,775 1,060,408 1,084,636 9,167,819 (a) Salary as per proovisions contained in section 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 32,400 10,800 - 43,200 17(2) Income-tax Act, 1961 (c) Profits in lieu opf salary - under section 17(3) Income- tax Act, 1961 2 Stock Option - 3 Sweat Equity - 4 Commission - - as % of Profit - others, specify… 5 Others, please specify - Total 7,055,175 1,071,208 1,084,636 9,211,019 As per Section 17(1) of the income tax act, it does not include PF contribution
VII. PENALTIES/ PUNISHMENT/ COMPOUNDING OF OFFENCES: Type Section of the Brief Details of Penalty/ Authority Appeal made, Companies Description Punishment/ [RD/ NCLT/ if any (give Act Compounding/ fees COURT] Details) imposed A. COMPANY Penalty Punishment NIL Compounding B. DIRECTORS Penalty Punishment NIL Compounding C. OTHER OFFIERS IN DEFAULT Penalty Punishment NIL Compounding
60 | Annual Report 2017-18 INDEPENDENT AUDITORS’ REPORT
To The Members of In conducting our audit, we have taken into account CENTRAL DEPOSITORY SERVICES (INDIA) the provisions of the Act, the accounting and auditing Limited standards and matters which are required to be included in the audit report under the provisions of Report on the Standalone Ind AS Financial the Act and the Rules made thereunder and the Order Statements issued under section 143(11) of the Act. We have audited the accompanying standalone Ind We conducted our audit of the standalone Ind AS AS financial statements of CENTRAL DEPOSITORY financial statements in accordance with the Standards SERVICES (INDIA) Limited (“the Company”), which on Auditing specified under Section 143(10) of the comprise the Balance Sheet as at March 31, 2018, Act. Those Standards require that we comply with and the Statement of Profit and Loss (including Other ethical requirements and plan and perform the audit Comprehensive Income), the Cash Flow Statement and to obtain reasonable assurance about whether the the Statement of Changes in Equity for the year then standalone Ind AS financial statements are free from ended, and a summary of the significant accounting material misstatement. policies and other explanatory information. An audit involves performing procedures to obtain Management’s Responsibility for the Standalone audit evidence about the amounts and the disclosures Ind AS Financial Statements in the standalone Ind AS financial statements. The Company’s Board of Directors is responsible for The procedures selected depend on the auditor’s the matters stated in Section 134(5) of the Companies judgment, including the assessment of the risks Act, 2013 (“the Act”) with respect to the preparation of of material misstatement of the standalone Ind AS these standalone Ind AS financial statements that give financial statements, whether due to fraud or error. In a true and fair view of the financial position, financial making those risk assessments, the auditor considers performance including other comprehensive income, internal financial control relevant to the Company’s cash flows and changes in equity of the Company in preparation of the standalone Ind AS financial accordance with the Indian Accounting Standards statements that give a true and fair view in order to (Ind AS) prescribed under section 133 of the Act read design audit procedures that are appropriate in the with the Companies (Indian Accounting Standards) circumstances. An audit also includes evaluating the Rules, 2015, as amended, and other accounting appropriateness of the accounting policies used and principles generally accepted in India. the reasonableness of the accounting estimates made This responsibility also includes maintenance of by the Company’s Directors, as well as evaluating the adequate accounting records in accordance with the overall presentation of the standalone Ind AS financial provisions of the Act for safeguarding the assets of statements. the Company and for preventing and detecting frauds and other irregularities; selection and application of We believe that the audit evidence obtained by us is appropriate accounting policies; making judgments sufficient and appropriate to provide a basis for our and estimates that are reasonable and prudent; and audit opinion on the standalone Ind AS financial design, implementation and maintenance of adequate statements. internal financial controls, that were operating effectively for ensuring the accuracy and completeness Opinion of the accounting records, relevant to the preparation In our opinion and to the best of our information and presentation of the standalone Ind AS financial and according to the explanations given to us, the statements that give a true and fair view and are free aforesaid standalone Ind AS financial statements give from material misstatement, whether due to fraud or the information required by the Act in the manner so error. required and give a true and fair view in conformity with the Ind AS and other accounting principles Auditors’ Responsibility generally accepted in India, of the state of affairs of Our responsibility is to express an opinion on these the Company as at March 31, 2018, and its profit, standalone Ind AS financial statements based on our total comprehensive income, its cash flows and the audit. changes in equity for the year ended on that date.
CDSL | 61 FINANCIAL STATEMENTS - STANDALONE
Report on Other Legal and Regulatory in “Annexure A”. Our report expresses an Requirements unmodified opinion on the adequacy and 1. As required by Section 143(3) of the Act, based on operating effectiveness of the Company’s our audit we report that: internal financial controls over financial reporting. a) We have sought and obtained all the information and explanations which to g) With respect to the other matters to be the best of our knowledge and belief were included in the Auditor’s Report in accordance necessary for the purposes of our audit. with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our b) In our opinion, proper books of account opinion and to the best of our information as required by law have been kept by the and according to the explanations given to Company so far as it appears from our us: examination of those books. i. The Company has disclosed the impact c) The Balance Sheet, the Statement of Profit of pending litigations as at March 31, and Loss including Other Comprehensive 2018, on its financial position in its Income, the Cash Flow Statement and standalone Ind AS financial statements; Statement of Changes in Equity dealt with by this Report are in agreement with the ii. The Company has made provision, relevant books of account. as required under the applicable law or accounting standards, for material d) In our opinion, the aforesaid standalone Ind foreseeable losses on long term contracts AS financial statements comply with the as at March 31, 2018. The Company Indian Accounting Standards prescribed does not have any outstanding derivative under section 133 of the Act. contracts as at March 31, 2018. e) On the basis of the written representations iii. There were no amounts which were received from the directors of the Company required to be transferred to the Investor and taken on record by the Board of Directors, Education and Protection Fund by the none of the directors is disqualified as on Company. March 31, 2018 from being appointed as a director in terms of Section 164(2) of the Act. 2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by f) With respect to the adequacy of the internal the Central Government in terms of Section financial controls over financial reporting of 143(11) of the Act, we give in “Annexure the Company and the operating effectiveness B” a statement on the matters specified in of such controls, refer to our separate Report paragraphs 3 and 4 of the Order.
For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 117365W)
G. K. Subramaniam Partner MUMBAI, April 21, 2018 (Membership No. 109839)
62 | Annual Report 2017-18 ANNEXURE “A” TO THE INDEPENDENT AUDITORS’ REPORT (Referred to in paragraph (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
Report on the Internal Financial Controls Over Our audit involves performing procedures to obtain Financial Reporting under Clause (i) of Sub-section audit evidence about the adequacy of the internal 3 of Section 143 of the Act financial controls system over financial reporting and We have audited the internal financial controls their operating effectiveness. Our audit of internal over financial reporting of CENTRAL DEPOSITORY financial controls over financial reporting included SERVICES (INDIA) Limited (“the Company”) as of obtaining an understanding of internal financial March 31, 2018 in conjunction with our audit of controls over financial reporting, assessing the risk the standalone Ind AS financial statements of the that a material weakness exists, and testing and Company for the year ended on that date. evaluating the design and operating effectiveness of internal control based on the assessed risk. Management’s Responsibility for Internal The procedures selected depend on the auditor’s Financial Controls judgement, including the assessment of the risks of material misstatement of the financial statements, The Company’s management is responsible for whether due to fraud or error. establishing and maintaining internal financial controls based on the internal control over financial We believe that the audit evidence we have obtained reporting criteria established by the Company is sufficient and appropriate to provide a basis for our considering the essential components of internal audit opinion on the Company’s internal financial control stated in the Guidance Note on Audit of controls system over financial reporting. Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants Meaning of Internal Financial Controls Over of India. These responsibilities include the design, Financial Reporting implementation and maintenance of adequate internal financial controls that were operating effectively A company’s internal financial control over financial for ensuring the orderly and efficient conduct of its reporting is a process designed to provide reasonable business, including adherence to company’s policies, assurance regarding the reliability of financial the safeguarding of its assets, the prevention and reporting and the preparation of financial statements detection of frauds and errors, the accuracy and for external purposes in accordance with generally completeness of the accounting records, and the accepted accounting principles. A company’s internal timely preparation of reliable financial information, as financial control over financial reporting includes required under the Companies Act, 2013. those policies and procedures that (1) pertain to the maintenance of records that, in reasonable Auditors’ Responsibility detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) Our responsibility is to express an opinion on the provide reasonable assurance that transactions Company’s internal financial controls over financial are recorded as necessary to permit preparation of reporting of the Company based on our audit. We financial statements in accordance with generally conducted our audit in accordance with the Guidance accepted accounting principles, and that receipts and Note on Audit of Internal Financial Controls Over expenditures of the company are being made only in Financial Reporting (the “Guidance Note”) issued accordance with authorisations of management and by the Institute of Chartered Accountants of India directors of the company; and (3) provide reasonable and the Standards on Auditing prescribed under assurance regarding prevention or timely detection of Section 143(10) of the Companies Act, 2013, to the unauthorised acquisition, use, or disposition of the extent applicable to an audit of internal financial company’s assets that could have a material effect on controls. Those Standards and the Guidance Note the financial statements. require that we comply with ethical requirements and plan and perform the audit to obtain reasonable Inherent Limitations of Internal Financial Controls assurance about whether adequate internal financial Over Financial Reporting controls over financial reporting was established and maintained and if such controls operated effectively in Because of the inherent limitations of internal all material respects. financial controls over financial reporting, including
CDSL | 63 FINANCIAL STATEMENTS - STANDALONE
the possibility of collusion or improper management Opinion override of controls, material misstatements due to In our opinion, to the best of our information and error or fraud may occur and not be detected. Also, according to the explanations given to us, the projections of any evaluation of the internal financial Company has, in all material respects, an adequate controls over financial reporting to future periods are internal financial controls system over financial subject to the risk that the internal financial control reporting and such internal financial controls over over financial reporting may become inadequate financial reporting were operating effectively as at because of changes in conditions, or that the degree March 31, 2018, based on “the criteria for internal of compliance with the policies or procedures may financial control over financial reporting established deteriorate. by the Company considering the essential components of internal control stated in the Guidance Note issued by the Institute of Chartered Accountants of India”.
For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 117365W)
G. K. Subramaniam Partner MUMBAI, April 21, 2018 (Membership No. 109839)
64 | Annual Report 2017-18 ANNEXURE “B” TO THE INDEPENDENT AUDITORS’ REPORT (Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
(i) (a) According to the information and investments or provided guarantees under the explanations given to us, the Company has provisions of Sections 185 and 186 of the Act and maintained proper records showing full hence reporting under clause (iv) of the Order is particulars, including quantitative details not applicable. and situation of fixed assets. (v) According to the information and explanations (b) The fixed assets were physically verified given to us, the Company has not accepted during the year by the Management in any deposit during the year. According to the accordance with a regular programme of information and explanations given to us, no verification which, in our opinion, provides order has been passed by the Company Law for physical verification of all the fixed assets Board or National Company Law Tribunal or at reasonable intervals. According to the the Reserve Bank of India or any Court or any information and explanation given to us, no other Tribunals in this regard in the case of the material discrepancies were noticed on such Company. verification. (c) According to the information and (vi) To the best our knowledge and according to explanations given to us and the records the information and explanations given to us, examined by us and based on the examination the Central Government has not prescribed the of the registered sale deed provided to us, we maintenance of cost records under section 148(1) report that, the title deeds, comprising all the of the Act, in respect of the services rendered by immovable properties of land and buildings the Company. which are freehold, are held in the name of the Company as at the balance sheet date. (vii) According to the information and explanations In respect of immovable properties of land given to us, in respect of statutory dues: and buildings that have been taken on lease (a) The Company has been regular in depositing and disclosed as fixed asset in the financial undisputed statutory dues, including statements, the lease agreements are in the Provident Fund, Employees’ State Insurance, name of the Company, where the Company Value Added Tax, Income-tax, Service Tax, is the lessee in the agreement. Goods and Service Tax, cess and other material statutory dues applicable to it to (ii) The Company does not have any inventory and the appropriate authorities. There were no hence reporting under clause (ii) of the Order is amounts payable in respect of Sales Tax, not applicable. Customs Duty, Work Contract Tax, and Excise Duty. (iii) To the best our knowledge and according to the information and explanations given to us, the (b) There were no undisputed amounts payable Company has not granted any loans, secured or in respect of Provident Fund, Employees’ unsecured, to companies, firms, Limited Liability State Insurance, Income-tax, Service Tax, Partnerships or other parties covered in the Goods and Service Tax, cess, Sales Tax, register maintained under section 189 of the Act. Customs Duty, Work Contract Tax, Value Added Tax, and Excise Duty and other (iv) To the best our knowledge and according to material statutory dues in arrears as at the information and explanations given to us, March 31, 2018 for a period of more than six the Company has not granted any loans, made months from the date they became payable.
CDSL | 65 FINANCIAL STATEMENTS - STANDALONE
(c) Details of dues of Income-tax and Service Tax which have not been deposited as on March 31, 2018 on account of disputes are given below:
Sr. Name of Nature of Forum where dispute is Period to Amount Amount No. Statute dues pending which the involved unpaid amount (` in (` in relates Lakhs) Lakhs) 1 Service Tax Service Tax Customs, Excise & Service FY 2004-05 3,293.70 3,293.70 Tax Appellate Tribunal , to FY 2008- West Zonal Bench 09 2 Service Tax Service Tax Customs, Excise & Service FY 2009-10 512.02 512.02 Tax Appellate Tribunal , West Zonal Bench 3 Service Tax Service Tax Customs, Excise & Service FY 2010-11 86.81 86.81 Tax Appellate Tribunal , West Zonal Bench 4 Service Tax Service Tax Customs, Excise & Service FY 2011-12 86.28 86.28 Tax Appellate Tribunal , West Zonal Bench 5 Income Tax Income Tax The Commissioner of FY 2010-11 4.92 4.92 Income Tax (Appeals), Mumbai
There are no dues of Sales Tax, Customs Duty, Excise Duty and Value Added Tax as on March 31, 2018 on account of disputes.
(viii) To the best of our knowledge and according (xi) In our opinion and according to the information to the information and explanations given to and explanations given to us, the Company us, the Company has not taken any loans or has paid / provided managerial remuneration borrowings from financial institutions, banks and in accordance with the requisite approvals government and has not issued any debentures. mandated by the provisions of section 197 read Hence reporting under clause (viii) of the Order is with Schedule V to the Act. not applicable to the Company. (xii) The Company is not a Nidhi Company and hence (ix) To the best of our knowledge and according to reporting under clause (xii) of the Order is not the information and explanations given to us, the applicable. Company has not raised moneys by way of initial public offer or further public offer (including debt (xiii) In our opinion and according to the information instruments) or term loans and hence reporting and explanations given to us the Company is in under clause (ix) of the Order is not applicable. compliance with Section 188 and 177 of the Act, where applicable, for all transactions with the (x) To the best of our knowledge and according to related parties and the details of related party the information and explanations given to us, transactions have been disclosed in the financial no fraud by the Company and no material fraud statements as required by the applicable on the Company by its officers or employees has accounting standards. been noticed or reported during the year.
66 | Annual Report 2017-18 (xiv) During the year the Company has not made any the Company has not entered into any non- preferential allotment or private placement of cash transactions with its directors or persons shares or fully or partly convertible debentures connected with them and hence provisions of and hence reporting under clause (xiv) of the section 192 of the Act are not applicable. Order is not applicable to the Company. (xvi) The Company is not required to be registered (xv) In our opinion and according to the information under section 45-IA of the Reserve Bank of India and explanations given to us, during the year Act, 1934.
For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 117365W)
G. K. Subramaniam Partner MUMBAI, April 21, 2018 (Membership No. 109839)
CDSL | 67 FINANCIAL STATEMENTS - STANDALONE standalone balance sheet as at March 31, 2018
(` in Lakhs) Particulars Note As at As at No. March 31, 2018 March 31, 2017 (Audited) (Audited) ASSETS 1 Non-current assets a. Property, plant and equipment 3 7,416.41 447.10 b. Other Intangible assets 4 62.43 34.97 c. Financial Assets i. Investments a. Investments in subsidiaries 5 8,630.00 6,635.00 b. Other investments 6 27,955.26 21,709.42 ii. Loans 7 9.98 8.17 iii. Other financial assets 8 134.39 572.77 d. Deferred tax assets (net) 9 321.89 228.69 e. Non current tax assets (net) 10 1,139.98 1,094.92 f. Other non-current assets 11 92.21 3.05 Total Non-Current Assets 45,762.55 30,734.09 2 Current assets a. Financial Assets i. Other investments 6 6,272.47 17,836.76 ii. Trade receivables 12 1,131.45 893.21 iii. Cash and cash equivalents 13 480.36 119.63 iv. Bank balances other than (iii) above 13 2,600.72 1,041.69 v. Loans 7 9.90 10.83 vi. Other financial assets 8 689.14 917.32 b. Other current assets 11 381.71 151.17 Total Current Assets 11,565.75 20,970.61 Total Assets (1+2) 57,328.30 51,704.70 EQUITY AND LIABILITIES 1 Equity a. Equity Share capital 14 10,450.00 10,450.00 b. Other Equity 15 39,774.53 35,779.49 Total Equity 50,224.53 46,229.49 LIABILITIES 2 Non-current liabilities a. Financial Liabilities Other financial liabilities 16 75.93 60.74 Total Non-current Liabilities 75.93 60.74 3 Current liabilities a. Financial Liabilities i. Trade payables 17 1,063.03 792.00 ii. Other financial liabilities 16 3,225.42 2,321.88 b. Provisions 18 874.09 743.20 c. Other current liabilities 19 1,572.70 1,195.53 d. Current tax liabilities (Net) 10 292.60 361.86 Total Current Liabilities 7,027.84 5,414.47 Total Equity and Liabilities (1+2+3) 57,328.30 51,704.70 Significant accounting policies 2 See accompanying notes forming part of the financial 1-39 statements In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
68 | Annual Report 2017-18 standalone Statement of Profit and Loss for the year ended march 31, 2018
(` in Lakhs) Particulars Note For the year ended For the year ended No. March 31, 2018 March 31, 2017 1 Revenue From Operations 20 15,416.79 12,161.89 2 Other Income 21 2,470.33 3,360.52 3 Total Income (1+2) 17,887.12 15,522.41 4 Expenses Employee benefits expense 22 2,670.25 2,262.84 Depreciation and amortisation expense 3&4 646.42 349.27 Impairment loss on financial assets 23 - 18.39 Administration and other expenses (including 24 3,932.31 3,708.26 contribution to IPF of ` 408.39 Lakhs in current year) (refer note no.37) Total expenses 7,248.98 6,338.76 5 Profit before tax (3 -4) 10,638.14 9,183.65 6 Tax expense: Current tax 2,962.40 2,700.00 Deferred tax (92.96) (301.41) Total tax expense 2,869.44 2,398.59 7 Profit for the year (5-6) 7,768.70 6,785.06 8 Other Comprehensive Income Items that will not be reclassified to profit or loss i. Remeasurement of the defined benefit plans; (0.69) (47.92) ii. Income tax relating to items that will not be 0.24 16.58 reclassified to profit or loss Total other comprehensive income for the year (0.45) (31.34) (net of tax) (i+ii) 9 Total Comprehensive Income for the year (7+8) 7,768.25 6,753.72 10 Earnings per equity share (EPS) : Basic and Diluted EPS (`) 7.43 6.49 Face value of share (`) 10.00 10.00 Weighted average number of shares 104,500,000 104,500,000 Significant accounting policies 2 See accompanying notes forming part of the 1-39 financial statements
In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
CDSL | 69 FINANCIAL STATEMENTS - STANDALONE
Statement of Changes in Equity for the year ended March 31, 2018
A. Equity Share Capital (` in Lakhs)
Particulars Amount Balance as at April 1, 2016 10,450.00 Changes in equity share capital during the year - Balance as at March 31, 2017 10,450.00 Changes in equity share capital during the year - Balance as at March 31, 2018 10,450.00
B. Other Equity (` in Lakhs) Particulars Reserves and Surplus Total General Retained Reserve Earnings Balance as at April 1, 2016 1,094.93 31,075.19 32,170.12 Profit for the year - 6,785.06 6,785.06 Other comprehensive income for the year (net of tax) - (31.34) (31.34) Payment of dividends - (3,144.35) (3,144.35) (Including dividend distribution tax) Balance at March 31, 2017 1,094.93 34,684.56 35,779.49 Profit for the period - 7,768.70 7,768.70 Other comprehensive income for the period - (0.45) (0.45) (net of tax) Payment of dividends - (3,773.21) (3,773.21) (Including dividend distribution tax) Balance at March 31, 2018 1,094.93 38,679.60 39,774.53
Significant accounting policies 2 See accompanying notes forming part of the financial statements 1-39
In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
70 | Annual Report 2017-18 Cash Flow Statement for the year ended March 31, 2018
(` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 A. CASH FLOW FROM OPERATING ACTIVITIES Profit for the year 7,768.70 6,785.06 Adjustments for Income tax expenses recognised in profit or loss 2,869.44 2,398.59 Depreciation and Amortisation expense 646.42 349.27 Gain on sale / disposal of Property, plant and equipment and (11.47) (10.19) Intangible assets (Net) Provision for gratuity and compensated absences 12.27 68.01 Interest income recognised in profit or loss (820.87) (1,018.80) Dividend income recognised in profit or loss (296.55) (444.37) Net gain arising on financial assets measured at FVTPL (1,152.54) (1,740.59) Impairment loss on financial assets and bad debts written off 285.42 376.00 Acturial liability recognised (0.69) (47.92) Operating profit before working capital changes 9,300.13 6,715.06 Movements in working capital (Increase) / Decrease in trade receivables (523.66) (291.76) (Increase) / Decrease in loans and other assets (323.70) (20.64) (Increase) / Decrease in other financial assets (425.96) (466.54) Increase / (Decrease) in trade payables 271.03 154.66 Increase / (Decrease) in provisions 119.31 295.22 Increase / (Decrease) in other financial liabilities and other 1,116.53 (548.01) liabilities Cash generated from operations 9,533.68 5,837.99 Direct taxes paid (net of refunds) (3,076.72) (2,538.39) Net cash generated from operating activities 6,456.96 3,299.60 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment, intangible assets and (7,481.34) (465.26) capital advances Proceeds from sale of property, plant and equipment 32.20 15.96 Net (Increase) / Decrease in investments 4,476.90 (3,632.48) Net Decrease / (Increase) in fixed deposits with banks (488.87) 2,350.00 Interest received 841.54 1,118.27 Dividend received 296.55 444.37 Net cash (used in) / generated from investing activities (2,323.02) (169.14)
CDSL | 71 FINANCIAL STATEMENTS - STANDALONE
Cash Flow Statement for the year ended March 31, 2018
(` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 C. CASH FLOW FROM FINANCING ACTIVITIES Dividend and taxes paid thereon (3,773.21) (3,144.35) Net cash used in financing activities (3,773.21) (3,144.35) Net (Decrease) / Increase in cash and cash equivalents (A+B+C) 360.73 (13.89) Cash and cash equivalents at the beginning of the year 119.63 133.52 Cash and cash equivalents at the end of the period * 480.36 119.63 * Cash and cash equivalents at the end of the year comprises i) Cash on Hand 0.15 0.21 ii) Cheques in hand 43.85 - iii) Balances with Banks - In Current Accounts 436.36 119.42
Significant accounting policies 2 See accompanying notes forming part of the financial statements 1-39 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Indian Accounting Standard - 7 “Cash Flow Statement”.
In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
72 | Annual Report 2017-18 Significant accounting policies and Notes forming part of the Financial Statements for the year ended March 31, 2018
1. Company Overview (i) Financial assets and liabilities Central Depository Services (India) Limited measured at fair value (refer (“CDSL”) herein after referred to as “the Company” accounting policy regarding is a limited company incorporated in India. The financial instruments). registered office of the Company is at 2501, A-Wing, (ii) Defined benefit and other long-term Marathon Futurex, N. M. Joshi Marg, Lower employee benefits. Parel, Mumbai- 400013. CDSL was set up with the objective of providing convenient, dependable Historical cost is generally based on and secure depository services at affordable cost the fair value of the consideration to all market participants. A depository facilitates given in exchange for goods and holding of securities in the electronic form and services. enables securities transactions to be processed c) Functional and presentation currency by book entry by a Depository participant (DP) The financial statements of the Company who acts as an agent of the depository, offers are presented in Indian rupees, the depository services to investors. national currency of India, which is the functional currency of the Company and The equity shares of the Company got listed on the currency of the primary economic the National Stock Exchange of India Limited on environment in which the Company June 30, 2017. operates. All financial information presented in Indian rupees has been The financial statements were authorised for rounded to the nearest Lakhs except issue by the Company’s Board of Directors on share and per share data in terms of April 21, 2018. Schedule III unless otherwise stated.
2. Significant Accounting Policies d) Use of estimates and judgment 2.1 Basis of preparation and presentation The preparation of financial statements a) Statement of compliance in conformity with Ind AS requires the management to make judgments, The financial statements as at and for estimates and assumptions that affect the year ended March 31, 2018 have the application of accounting policies been prepared in accordance with Indian and the reported amounts of assets, Accounting Standards (“Ind AS”) notified liabilities, income, expenses, disclosure under section 133 of the Companies Act of contingent assets and disclosure of 2013, read together with the companies contingent liabilities. Actual results (Indian Accounting Standards) Rules, may differ from these estimates. 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Estimates and underlying assumptions are reviewed on a periodic basis. b) Basis of measurement Revisions to accounting estimates The financial statements have been are recognised in the period in which prepared and presented under the the estimates are revised and in any historical cost convention, except for future periods affected. In particular, certain items that have been measured information about significant areas of at fair values at the end of each estimation, uncertainty and critical reporting period as required by the judgments in applying accounting relevant Ind AS: policies that have the most significant
CDSL | 73 FINANCIAL STATEMENTS - STANDALONE
effect on the amounts recognised in the currencies using the exchange rates financial statements is included in the prevailing at the dates of the respective following notes: transactions. Foreign exchange gains and losses resulting from the settlement (i) Income taxes: The Company’s of such transactions and from the tax jurisdiction is in India. translation at the exchange rates Significant judgments are involved prevailing at reporting date of monetary in determining the provision for assets and liabilities denominated in income taxes, including the amount foreign currencies are recognised in expected to be paid or recovered the Statement of Profit and Loss and in connection with uncertain tax reported within foreign exchange gains/ positions. (losses). (ii) Employee Benefits: Defined employee benefit assets / liabilities ii) Investments in subsidiaries determined based on the present Investments in subsidiaries are value of future obligations using measured at cost. Dividend income if assumptions determined by the any from subsidiaries is recognised Company with advice from an when its right to receive the dividend is independent qualified actuary. established. (iii) Property plant and equipment and Intangible assets: The charge in iii) Financial instruments respect of periodic depreciation Financial assets and financial liabilities / amortisation is derived after are recognised when the Company determining an estimate of an becomes a party to the contractual asset’s expected useful life and the provisions of the instruments. expected residual value at the end of its life. The useful lives and residual Financial assets and financial liabilities values of the Company’s assets are are initially measured at fair value. determined by the management at Transaction costs that are directly the time the asset is acquired and attributable to the acquisition or reviewed periodically, including at issue of financial assets and financial each financial year end. The lives liabilities (other than financial assets are based on historical experience and financial liabilities at fair value with similar assets as well as through profit or loss) are added to anticipation of future events, which or deducted from the fair value of the may impact their life, such as financial assets or financial liabilities, changes in technology. as appropriate, on initial recognition. Transaction costs directly attributable (iv) Impairment of trade receivables: to the acquisition of financial assets or The Company estimates the financial liabilities at fair value through probability of collection of accounts profit or loss are recognised immediately receivable by analysing historical in profit or loss. payment patterns, customer status, customer credit-worthiness Purchase or sales of financial assets and current economic trends. If the that require delivery of assets within a financial condition of a customer time frame established by regulation or deteriorates, additional allowances convention in the market place (regular may be required. way trade) are recognised on trade date. While, loans and borrowings are 2.2 Summary of significant accounting recognised net of directly attributable policies transactions costs. i) Foreign currency transactions and balances For the purpose of subsequent Transactions in foreign currency are measurement, financial instruments translated into the respective functional of the Company are classified in the
74 | Annual Report 2017-18 following categories: financial assets value plus transaction costs and (debt instrument) comprising amortised subsequently carried at amortised cost, financial assets (debt instrument) cost using the effective interest comprising Fair Value Through Other method, less any impairment loss. Comprehensive Income (“FVTOCI”), financial asset (equity instruments) Amortised cost are represented by at Fair value Through Profit and Loss investment in interest bearing debt account (“FVTPL”) and FVTOCI and instruments, trade receivables, financial liabilities at amortised cost or security deposits, cash and cash FVTPL. equivalents, employee and other advances and eligible current and The Company derecognises a financial non-current assets. asset when the contractual rights to the cash flows from the financial asset expire Cash and cash equivalents comprise or it transfers the financial asset and the cash on hand and in banks and transfer qualifies for derecognition under demand deposits with banks Ind AS 109. A financial liability (or a part with original maturity less than 3 of a financial liability) is derecognised months which can be withdrawn from the Company’s Balance Sheet when at any time without prior notice or the obligation specified in the contract is penalty on the principal. discharged or cancelled or expires. For the purposes of the cash The classification of financial flow statement, cash and cash instruments depends on the objective equivalents include cash on hand, of the business model for which it is in banks and demand deposits with held. Management determines the banks, net of outstanding bank classification of its financial instruments overdrafts that are repayable on at initial recognition. demand, book overdraft and are considered part of the Company’s Financial assets cash management system. a) Financial assets (debt instruments) at amortised cost b) Financial assets (debt instruments) at FVTOCI A financial asset shall be measured at amortised cost if both of the A debt instrument shall be following conditions are met: measured at fair value through other comprehensive income if both • the financial asset is held of the following conditions are met: within a business model whose objective is to hold financial • The objective of the business assets in order to collect model is achieved by both contractual cash flows and collecting contractual cash flows and selling financial • the contractual terms of the assets and financial asset gives rise on specified dates to cash flows • The asset’s contractual cash that are solely payments of flow represent SPPI. principal and interest on the principal amount outstanding Debt instruments included within (SPPI). FVTOCI category are measured initially as well as at each reporting They are presented as current period at fair value plus transaction assets, except for those maturing costs. Fair value movements are later than 12 months after the recognised in Other Comprehensive reporting date which are presented Income (OCI). However, the as non-current assets. Financial Company recognises interest assets are measured initially at fair income, impairment losses and
CDSL | 75 FINANCIAL STATEMENTS - STANDALONE
reversals and foreign exchange cost or FVTOCI criteria, as FVTPL if gain or loss in profit and loss. doing so eliminates or significantly On derecognition of the asset, reduces a measurement or cumulative gain or loss previously recognition inconsistency. recognised in OCI is reclassified e) Earmarked Funds from equity to profit and loss. Interest earned is recognised under Earmarked Funds represent bonus the Effective Interest Rate (EIR) payable to Managing Director of model. the Company, held for specific purposes as per the SEBI letter viz. Currently the Company has not MRD/DP/OW/31553/2013 dated classified any interest bearing debt December 05, 2013. These amounts instruments under this category. are invested in mutual fund units and the same are earmarked in the c) Equity instruments at FVTOCI Balance Sheet. The Gain / (Loss) and FVTPL on changes in fair value of such investments are shown as liabilities All equity instruments are / assets and are not routed through measured at fair value other than the Profit or Loss. investments in subsidiaries. Equity instruments held for trading is Financial liabilities classified as FVTPL. For all other a) Financial liabilities at equity instruments, the Company amortised cost may make an irrevocable election Financial liabilities at to present subsequent changes in amortised cost represented the fair value in OCI. The Company by trade and other payables makes such election on an are initially recognised at instrument-by-instrument basis. fair value, and subsequently carried at amortised cost using If the Company decides to classify the effective interest method. an equity instrument as at FVTOCI, then all fair value changes on the b) Financial liabilities at FVTPL instrument, excluding dividend Financial liabilities at FVTPL are recognised in OCI which is not represented by contingent subsequently reclassified to profit consideration are measured or loss. at fair value with all changes recognised in the profit or loss. Currently the Company has not classified any equity instrument at iv) Equity Instruments FVTOCI. Ordinary shares: Ordinary shares are classified as equity. Incremental costs If the Company decides to classify directly attributable to the issuance of an equity instrument as at FVTPL, new ordinary shares are recognised as then all fair value changes on a deduction from equity, net of any tax the instrument and dividend are effect (if any). recognised in Profit or Loss.
v) Property, plant and equipment (PPE) d) Financial assets at FVTPL Recognition and measurement: FVTPL is a residual category for financial assets. Any financial asset Property, plant and equipment are which does not meet the criteria for measured at cost less accumulated categorisation as at amortised cost depreciation and impairment losses, if or as FVTOCI, is classified as FVTPL. any. Cost includes expenditures directly In addition the Company may elect attributable to the acquisition of the to designate the financial asset, asset. which otherwise meets amortised
76 | Annual Report 2017-18 The Group had elected to consider the loss when the asset is derecognised. carrying value of all its property, plant and equipment appearing in the financial vii) Depreciation: statements prepared in accordance with Depreciation has been provided on the Accounting Standards notified under straight-line method as per the useful the section 133 of the Companies Act life prescribed in Schedule II to the 2013, read together with Rule 7 of the Companies Act, 2013 except in respect Companies (Accounts) Rules, 2014 of the following categories of assets, and used the same as deemed cost in in whose case the life of the assets opening Ind AS Balance sheet prepared has been assessed as under based on on 1st April, 2016. technical advice, taking into account the nature of the asset, the estimated Derecognition of PPE: usage of the asset, the operating An item of property, plant and equipment conditions of the asset, past history of is derecognised upon disposal or when no replacement, anticipated technological future economic benefits are expected to changes, manufacturers warranties and arise from the continued use of the asset. maintenance support, etc.: Any gain or loss arising on the disposal or retirement of an item of property, Description of asset Useful life plant and equipment is determined as (in years) the difference between the sales proceeds Building (leasehold) 10 and the carrying amount of the asset and Building (Freehold) 60 is recognised in profit or loss. Civil and Interior work 10 vi) Intangible assets Computer Hardware/ 2 Intangible assets purchased are Software measured at cost as of the date Office Equipment 3-5 of acquisition less accumulated Furniture and Fixtures 5 amortisation and accumulated Vehicles 4 impairment, if any. Assets held under finance leases are depreciated over their expected useful Amortisation has been provided on the lives on the same basis as owned assets. straight-line method as per the useful However, when there is no reasonable life prescribed in Schedule II to the certainty that ownership will be obtained Companies Act, 2013 by the end of the lease term, assets are depreciated over the shorter of the lease Intangible assets consists of computer term and their useful lives. software. Depreciation methods, useful lifes and Amortisation methods, useful lifes and residual values are reviewed at each residual values are reviewed at each reporting date, with the effect of any reporting date, with the effect of any changes in estimate accounted for on a changes in estimate accounted for on a prospective basis. prospective basis. When parts of an item of property, plant Derecognition of intangible assets: and equipment have different useful An intangible asset is derecognised on lifes, they are accounted for as separate disposal, or when no future economic items (major components) of property, benefits are expected from use. Gains plant and equipment. Subsequent or losses arising from derecognition of expenditure relating to property, plant an intangible asset, measured as the and equipment is capitalised only when difference between the net disposal it is probable that future economic proceeds and the carrying amount of benefits associated with these will the asset, and are recognised in profit or flow to the Company and the cost of the item can be measured reliably.
CDSL | 77 FINANCIAL STATEMENTS - STANDALONE
Repairs and maintenance costs are approach’ for recognition of recognised in the Statement of Profit impairment loss allowance on trade and Loss when incurred. The cost and receivables. related accumulated depreciation are eliminated from the financial statements The application of simplified upon sale or disposition of the asset approach does not require the and the resultant gains or losses are Company to track changes in recognised in the Profit or Loss. credit risk. Rather, it recognises impairment loss allowance Amounts paid towards the acquisition based on lifetime ECLs at each of property, plant and equipment reporting date, right from its initial outstanding as of each reporting date recognition. and the cost of property, plant and equipment not ready for intended use For recognition of impairment before such date are disclosed under loss on other financial assets capital work- in-progress. Depreciation and risk exposure, the Company is not recorded on capital work- determines that whether there has in-progress until construction and been a significant increase in the installation are complete and the asset credit risk since initial recognition. is ready for its intended use. If credit risk has not increased significantly, 12-month ECL is viii) Leases used to provide for impairment loss. Leases under which the Company However, if credit risk has increased assumes substantially all the risks and significantly, lifetime ECL is used. rewards of ownership are classified If in subsequent period, credit as finance leases. All other leases are quality of the instrument improves classified as operating leases. such that there is no longer a significant increase in credit risk Finance Lease: since initial recognition, then When acquired, such assets are the entity reverts to recognising capitalised at fair value or present impairment loss allowance based value of the minimum lease payments on 12 month ECL. Lifetime ECLs at the inception of the lease, whichever are the expected credit losses is lower. Corresponding liability to resulting from all possible default the lessor is included in the financial events over the expected life of a statements as finance lease obligation. financial instrument. The 12 month ECL is a portion of the lifetime ECL Operating Lease: which results from default events that are possible within 12 months Lease payments under operating leases after the reporting date. ECL is the are recognised as an income / expense difference between all contractual on a straight line basis in the Statement cash flows that are due to the of Profit and Loss over the lease term Company in accordance with the except where the lease payments are contract and all the cash flows that structured to increase in line with the entity expects to receive (i.e. expected general inflation. all shortfalls), discounted at the original EIR. When estimating the ix) Impairment cash flows, an entity is required to a) Financial assets carried at consider: amortised cost and FVTOCI • All contractual terms of the In accordance with Ind AS 109, the financial instrument (including Company applies Expected Credit prepayment, extension etc.) Loss (ECL) model for measurement over the expected life of and recognition of impairment loss. the financial instrument. The Company follows ‘simplified
78 | Annual Report 2017-18 However, in rare cases relevant amounts are written off. when the expected life of the If the amount of impairment loss financial instrument cannot subsequently decreases and the be estimated reliably, then the decrease can be related objectively entity is required to use the to an event occurring after the remaining contractual term of impairment loss was recognised, the financial instrument. then the previously recognised impairment loss is reversed through • Cash flows from the sale of profit or loss. collateral held or other credit enhancements that are integral The recoverable amount of an asset to the contractual terms. or cash-generating unit (as defined below) is the greater of its value The Company has used a practical in use and its fair value less costs expedient by computing the to sell. In assessing value in use, expected credit loss allowance for the estimated future cash flows trade receivable based on a detailed are discounted to their present analysis of trade receivable by value using a pre-tax discount individual departments. rate that reflects current market assessments of the time value ECL impairment loss allowance of money and the risks specific (or reversal) recognised during the to the asset. For the purpose of period is recognised as income / impairment testing, assets are expense in the Statement of Profit grouped together into the smallest and Loss. group of assets that generates cash Financial assets measured at inflows from continuing use that amortised cost, contractual revenue are largely independent of the cash receivable: ECL is presented as inflows of other assets or groups of an allowance, i.e. as an integral assets (the “cash-generating unit”). part of the measurement of those x) Employee benefits assets in the balance sheet. The allowance reduces the net carrying The Company participates in various amount. Until the asset meets write employee benefit plans. Post- off criteria, the Company does not employment benefits are classified as reduce impairment allowance from either defined contribution plans or the gross carrying amount. defined benefit plans. Under a defined contribution plan, the Company’s only b) Non-financial assets obligation is to pay a fixed amount The Company assesses at each with no obligation to pay further reporting date whether there is contributions if the fund does not hold any observable evidence that a sufficient assets to pay all employee non-financial asset or a group of benefits. The related actuarial and non-financial assets is impaired. investment risks fall on the employee. If any such indication exists, the The expenditure for defined contribution Company estimates the amount of plans is recognised as expense during impairment loss. An impairment the period when the employee provides loss is calculated as the difference service. Under a defined benefit plan, it between an asset’s carrying amount is the Company’s obligation to provide and recoverable amount. Losses agreed benefits to the employees. The are recognised in profit or loss and related actuarial and investment risks reflected in an allowance account. fall on the Company. The present When the Company considers that value of the defined benefit obligations there are no realistic prospects is calculated using the projected unit of recovery of the asset, the credit method.
CDSL | 79 FINANCIAL STATEMENTS - STANDALONE
a) Short term employee benefits: year end. Accumulated Performance linked bonus is compensated absences, provided as and when the same is which are expected to approved by the management. be availed or encashed beyond 12 months from b) Post-employment benefits the end of the year are and other long term employee treated as non-current benefits are treated as follows: employee benefits. The i) Defined Contribution Plans Company’s liability is Provident Fund: The Provident actuarially determined fund plan is operated by (using the Projected Unit Regional Provident Fund Credit method) at the end Commissioner (RPFC) and the of each year. contribution thereof are paid / xi) Provisions provided for. Provisions are recognised when the Contributions to the defined Company has a present obligation (legal contribution plans are or constructive) as a result of a past charged to profit or loss for the event, it is probable that an outflow respective financial year as and of economic benefits will be required when services are rendered by to settle the obligation and a reliable the employees. estimate can be made of the amount of the obligation. ii) Defined Benefits Plans • Gratuity: The amount recognised as a provision Gratuity for employees is the best estimate of the consideration is covered by Gratuity required to settle the present obligation Scheme with Life at the end of the reporting period, taking Insurance Corporation of into account the risks and uncertainties India and the contribution surrounding the obligation. thereof is paid / provided for. Provision for gratuity When some or all of the economic is made on the basis of benefits required to settle a provision actuarial valuation on are expected to be recovered from a Projected Unit Credit third party, the receivable is recognised Method as at the end of as an asset, if it is virtually certain that the period. reimbursement will be received and the amount of the receivable can be • Compensated absences: measured reliably. Accumulated Provisions for onerous contracts are compensated absences, recognised when the expected benefits which are expected to be to be derived by the Company from a availed or encashed within contract are lower than the unavoidable 12 months from the end costs of meeting the future obligations of the year are treated under the contract. Provisions for as short term employee onerous contracts are measured at the benefits. The obligation present value of lower of the expected towards the same is net cost of fulfilling the contract and the measured at the expected expected cost of terminating the contract. cost of accumulating compensated absences If the effect of the time value of money as the additional amount is material, provisions are discounted expected to be paid as using a current pre-tax rate that reflects, a result of the unused when appropriate, the risks specific to entitlement as at the the liability.
80 | Annual Report 2017-18 Provisions are reviewed at each balance authorities based on the taxable sheet date adjusted to reflect the income for the period. The tax rates current best estimates. Contingent and tax laws used to compute the liabilities are not recognised in the current tax amount are those that financial statements. Contingent Assets are enacted at the reporting date are not recognised but disclosed in the and applicable for the period. The Financial Statements when economic Company offsets current tax assets inflow is probable. and current tax liabilities, where it has a legally enforceable right to xii) Revenue set off the recognised amounts and In contracts involving the rendering of where it intends either to settle on a services, revenue is measured using the net basis or to realise the asset and proportionate completion method and liability simultaneously. are recognised net of applicable taxes b) Deferred income tax provided that at the time of performance Deferred income tax is recognised it is not unreasonable to expect ultimate using the balance sheet approach. collection. If at the time of raising of Deferred income tax assets and any claim it is unreasonable to expect liabilities are recognised for ultimate collection, revenue recognition deductible and taxable temporary is postponed till the time the ultimate differences arising between the tax collection is made. base of assets and liabilities and their carrying amount in financial Interest is recognised on a time statements, except when the proportionate basis taking into account deferred income tax arises from the the amount outstanding and the rate initial recognition of goodwill or an applicable. asset or liability in a transaction that is not a business combination xiii) Investment income and affects neither accounting nor Investment income consists of interest taxable profits or loss at the time of income on funds invested, dividend the transaction. income and gains on the disposal of FVTPL financial assets. Interest income Deferred income tax asset are is recognised as it accrues in the recognised to the extent that it is Statement of Profit and Loss, using the probable that taxable profit will effective interest method. be available against which the deductible temporary differences, Dividend income is recognised in the and the carry forward of unused Profit or Loss on the date that the tax credits and unused tax losses Company’s right to receive payment is can be utilised. Deferred income established. tax liabilities are recognised for all taxable temporary differences. xiv) Income tax The carrying amount of deferred Income tax comprises current and income tax assets is reviewed at deferred tax. Income tax expense is each reporting date and reduced recognised in profit or loss except to to the extent that it is no longer the extent it relates to items directly probable that sufficient taxable recognised in equity or in other profit will be available to allow all or comprehensive income. part of the deferred income tax asset a) Current income tax to be utilised. Deferred income tax assets and liabilities are measured Current income tax for the current at the tax rates that are expected to and prior periods are measured at apply in the period when the asset the amount expected to be recovered is realised or the liability is settled, from or paid to the taxation based on tax rates (and tax laws) that
CDSL | 81 FINANCIAL STATEMENTS - STANDALONE
have been enacted or substantively 1. it is expected to be realised in, or enacted at the reporting date. is intended for sale or consumption in, the entity’s normal operating Deferred tax assets include cycle; Minimum Alternate Tax (MAT) paid in accordance with the tax laws in 2. it is held primarily for the purpose India, which is likely to give future of being traded; economic benefits in the form of 3. it is expected to be realised within availability of set off against future twelve months after the balance income tax liability. Accordingly, sheet date MAT is recognised as deferred tax asset in the balance sheet when 4. it is cash or a cash equivalent the asset can be measured reliably unless it is restricted from being and it is probable that the future exchanged or used to settle a economic benefit associated with liability for at-least twelve months the asset will be realised. after the balance sheet date The Company recognises interest levied 5. All other assets are classified as and penalties related to income tax non-current. assessments in income tax expenses. Liabilities: A liability is classified as current when it satisfies any of the xv) Earnings per share following criteria: The Company reports basic and diluted earnings per share in accordance with 1. it is expected to be settled in, the Ind AS 33 on Earnings per share. Basic entity’s normal operating cycle; earnings per share is computed using 2. it is held primarily for the purpose the weighted average number of equity of being traded; it is due to be shares outstanding during the period. settled within twelve months after the balance sheet date Diluted EPS is computed by dividing the net profit after tax by the weighted 3. the Company does not have average number of equity shares an unconditional right to defer considered for deriving basic EPS and settlement of the liability for at least also weighted average number of equity twelve months after the balance shares that could have been issued sheet date. upon conversion of all dilutive potential 4. All other liabilities are classified as equity shares. Dilutive potential equity non-current shares are deemed converted as of the beginning of the period, unless issued xvii) Operating Cycle at a later date. Dilutive potential equity Based on the nature of products / shares are determined independently activities of the Company and the for each period presented. The number normal time between acquisition of of equity shares and potentially dilutive assets and their realisation in cash or equity shares are adjusted for bonus cash equivalents, the Company has shares, as appropriate. determined its operating cycle as 12 months for the purpose of classification xvi) Current / Non-current classification of its assets and liabilities as current The Company present assets and and non-current. liabilities in the balance sheet based on current/non-current classification 2.3 New standards and interpretations not yet adopted Assets: An asset is classified as current a) Appendix B to Ind AS 21, Foreign when it satisfies any of the following currency transactions and advance criteria: consideration:
82 | Annual Report 2017-18 On March 28, 2018, Ministry of c) Amendment to Ind AS 7 Corporate Affairs (“MCA”) has notified The amendment to Ind AS 7 requires the Companies (Indian Accounting the entities to provide disclosures that Standards) Amendment Rules, 2018 enable users of financial statements to containing Appendix B to Ind AS 21, evaluate changes in liabilities arising Foreign currency transactions and from financing activities, including advance consideration which clarifies the both changes arising from cash flows date of the transaction for the purpose and non-cash changes, suggesting of determining the exchange rate to use inclusion of a reconciliation between on initial recognition of the related asset, the opening and closing balances in expense or income, when an entity has the balance sheet for liabilities arising received or paid advance consideration from financing activities, to meet the in a foreign currency. The amendment disclosure requirement. will come into force from April 1, 2018. The Company is evaluating the b) Ind AS 115- Revenue from Contract requirements of the amendment and with Customers: the effect on the financial statements is On March 28, 2018, MCA has notified being evaluated. the Ind AS 115, Revenue from Contract with Customers. The core principle d) Amendment to Ind AS 102 of the new standard is that an entity The amendment to Ind AS 102 provides should recognise revenue to depict the specific guidance to measurement of transfer of promised goods or services cash-settled awards, modification of to customers in an amount that reflects cash-settled awards and awards that the consideration to which the entity include a net settlement feature in expects to be entitled in exchange for respect of withholding taxes. It clarifies those goods or services. Further the new that the fair value of cash-settled awards standard requires enhanced disclosures is determined on a basis consistent with about the nature, amount, timing and that used for equity-settled awards. uncertainty of revenue and cash flows Market-based performance conditions arising from the entity’s contracts with and non-vesting conditions are reflected customers. in the ‘fair values’, but non-market performance conditions and service The standard permits two possible vesting conditions are reflected in methods of transition: the estimate of the number of awards • Retrospective approach - Under expected to vest. Also, the amendment this approach the standard will clarifies that if the terms and conditions be applied retrospectively to each of a cash-settled share-based payment prior reporting period presented transaction are modified with the in accordance with Ind AS 8 - result that it becomes an equity-settled Accounting Policies, Changes in share-based payment transaction, the Accounting Estimates and Errors transaction is accounted for as such from the date of the modification. • Retrospectively with cumulative Further, the amendment requires the effect of initially applying the award that include a net settlement standard recognised at the date feature in respect of withholding taxes of initial application (Cumulative to be treated as equity-settled in its catch - up approach) The effective entirety. The cash payment to the tax date for adoption of Ind AS 115 is authority is treated as if it was part of financial periods beginning on or an equity settlement. after April 1, 2018. The Company does not have share based payments The Company will adopt the standard hence there will be no impact on the financial on April 1, 2018. statements.
CDSL | 83 FINANCIAL STATEMENTS - STANDALONE Total 30.83 45.36 25.06 24.73 531.29 432.57 933.03 236.15 274.84 485.93 565.97 933.03 485.93 447.10 8,443.58 1,027.17 7,416.41 7,555.91 ( ` in Lakhs) 3.05 3.05 56.13 27.39 25.87 28.93 21.55 21.73 28.75 34.84 28.75 60.54 92.83 Motor 101.81 130.55 130.55 153.37 101.80 vehicles 0.13 1.20 6.55 0.02 3.69 40.50 41.57 13.89 13.73 27.60 27.79 41.57 27.60 51.70 13.97 Office 235.76 270.78 219.08 equipments - - - and 72.02 72.02 15.57 27.27 26.38 53.65 59.97 10.77 72.02 53.65 18.37 262.78 319.23 102.85 216.38 fixtures Furniture - - 3.31 3.31 39.40 38.75 74.84 18.51 18.89 28.40 43.98 27.94 74.84 93.35 43.98 71.92 21.43 30.86 Computers - - 7.22 20.19 97.09 154.13 290.81 444.94 437.50 134.70 231.79 280.04 444.94 862.25 231.79 504.61 357.64 213.15 Plant and equipments ------50.08 50.08 50.08 18.86 68.94 169.10 169.10 100.16 169.10 169.10 100.16 150.24 Building Leasehold------0.01 0.01 0.01 0.01 0.01 0.01 Freehold -Building ------Work 10.35 10.35 250.22 250.22 239.87 Interior Civil and Civil ------Office 74.96 74.96 Freehold 6,325.27 6,250.31 6,325.27 Refer to note 33 for disclosure of contractual commitments the acquisition property, plant and equipment. The Campany’s obligations under finance lease (see note 27) are secured by the lessor’s title to leased assets. Balance as at April 1, 2016 Additions during the year ended M arch 31, 2017 Deductions / adjustments Balance as at April 1, 2017 Additions during the year Deductions /adjustments Balance as at April 1, 2016 Depreciation for the year ended M arch 31, 2017 Balance as at April 1, 2017 Deductions / Adjustments Depreciation for the year Deductions / Adjustments Gross carrying value Particulars Balance as at March 31, 2017 Balance as at March 31, 2018 Accumulated depreciation and impairment Balance as at March 31, 2017 Balance as at March 31, 2018 Net carrying value As at March 31, 2018 As at March 31, 2017 3. Property, plant and equipment Note: 1 Contractual commitments: 2
84 | Annual Report 2017-18 4. Intangible assets (` in Lakhs) Particulars Computer Total Softwares Gross carrying value Balance as at April 1, 2016 170.98 170.98 Additions during the year ended March 31, 2017 45.67 45.67 Deductions / adjustments - - Balance as at March 31, 2017 216.65 216.65 Balance as at April 1, 2017 216.65 216.65 Additions during the year 107.91 107.91 Deductions / adjustments - - Balance as at March 31, 2018 324.56 324.56 Accumulated amortisation and impairment Balance as at April 1, 2016 107.25 107.25 Amortisation for the year ended March 31, 2017 74.43 74.43 Deductions / Adjustments - - Balance as at March 31, 2017 181.68 181.68 Balance as at April 1, 2017 181.68 181.68 Amortisation for the year 80.45 80.45 Deductions / Adjustments - - Balance as at March 31, 2018 262.13 262.13 Net carrying value As at March 31, 2018 62.43 62.43 As at March 31, 2017 34.97 34.97
Note: Contractual commitments: Refer to Note 33 for disclosure of contractual commitments for the acquisition of Intangible assets.
5. Investments in subsidiaries (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Un-quoted investments (measured at cost) Investments in equity instruments - CDSL Ventures Limited (Fully paid up) 2,100.00 2,100.00 - CDSL Insurance Repository Limited (Fully paid up) 1,530.00 1,530.00 - CDSL Commodity Repository Limited (Fully paid up) 5,000.00 3,005.00 Total aggregate un-quoted investments 8,630.00 6,635.00 Aggregate carrying value of un-quoted investments 8,630.00 6,635.00 Aggregate amount of impairment in value of investments in - - subsidiaries
CDSL | 85 FINANCIAL STATEMENTS - STANDALONE
6. Other investments (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current investments Un-quoted investments (all fully paid) Investments in equity instruments measured at FVTPL - Belapur Railway Station Commercial Company Limited 0.50 0.50 (BRSCCL) (Fully paid equity shares of ` 10 each) - National E-Governance Services Limited (NESL) 300.00 300.00 (Fully paid equity shares of ` 10 each) Aggregate value of un-quoted Investments 300.50 300.50 Total investment in equity instruments at FVTPL 300.50 300.50 Quoted Investments Investments in tax free bonds measured at amortised cost Owned - Tax free bonds 9,040.46 9,055.33 9,040.46 9,055.33 Investments in mutual funds measured at FVTPL Owned - Units of growth oriented debt schemes of mutual funds 18,591.46 12,312.73 Earmarked Units of growth oriented debt schemes of mutual funds 22.84 40.86 18,614.30 12,353.59 Total Non-current investments 27,955.26 21,709.42
Aggregate amount of quoted investments 27,654.76 21,408.92 Market value of quoted investments 27,654.76 21,408.92 Aggregate amount of unquoted investments 300.50 300.50 Current investments Quoted investments Investments in mutual funds measured at FVTPL Owned - Investments in mutual funds - ETFs - 275.54 - 275.54 Unquoted investments Investments in mutual funds measured at FVTPL Owned - Investments in other mutual funds 4,948.66 6,114.97 4,948.66 6,114.97 Current portion of long term investments Quoted investments Investments in mutual funds measured at FVTPL Owned - Units of growth oriented debt schemes of mutual funds 1,302.92 11,428.79 Earmarked - Units of growth oriented debt schemes of mutual funds 20.89 17.46 1,323.81 11,446.25 Total current investments 6,272.47 17,836.76
Aggregate amount of quoted investments 1,323.81 11,721.79 Aggregate amount of unquoted investments 4,948.66 6,114.97
86 | Annual Report 2017-18 6A Investments Type Particulars No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Details of Non current investments Invesment in subsidiaries a) Investment in equity shares Unquoted CDSL Ventures Limited (Fully 4,500,000 4,500,000 2,100.00 2,100.00 paid up) Unquoted CDSL Insurance Repository 15,299,999 15,299,999 1,530.00 1,530.00 Limited (Fully paid up) Unquoted CDSL Commodity Repository 50,000,000 30,050,000 5,000.00 3,005.00 Limited (Fully paid up) 8,630.00 6,635.00 Invesment in others b) Investments in equity shares Unquoted Belapur Railway Station 5,000 5,000 0.50 0.50 Commercial Company Limited (BRSCCL) (Fully paid up) Unquoted National E-Governance 3,000,000 3,000,000 300.00 300.00 Services Limited (NESL) (Fully paid up) 300.50 300.50 c) Investment in tax free bonds Quoted 7.21% REC Tax Free bonds 50 50 500.03 500.07 211122 Quoted 7.22% PFC Tax Free Bond 50 50 500.03 500.03 Series 95 291122 Quoted 7.18% IRFCL Tax Free Bonds 130,000 130,000 1,304.38 1,305.08 190223 Quoted 7.19% IRFC Tax Free Bond 50 50 500.46 500.53 310725 Quoted 8.01% NHB Tax Free Bonds 70 70 700.19 700.22 300823 Quoted 7.17% NHB Tax Free Bonds 50 50 502.12 502.49 010123 Quoted 8.35% NHAI Tax Free Bonds 70 70 700.14 700.16 221123 Quoted 8.20% NHAI Tax Free Bonds 72,500 72,500 742.70 746.59 250122 Quoted 8.18% NHPC Tax Free Bonds 22,547 22,547 225.47 225.47 021123 Quoted 8.19% NTPC Tax Free Bonds 50 50 500.03 500.04 040324 Quoted 8.41% NTPC Tax Free Bonds 31,665 31,665 316.65 316.65 161223 Quoted 8.20% PFC Tax Free Bonds 100,000 100,000 1,029.56 1,036.66 010222 Quoted 7.15% NTPC Tax Free Bond 50 50 500.26 500.29 210825
CDSL | 87 FINANCIAL STATEMENTS - STANDALONE
Type Particulars No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted 7.17% RECL Tax Free Bond 50 50 500.36 500.39 230725 Quoted 8.18% RECL Tax Free Bonds 50 50 518.08 520.66 111023 9,040.46 9,055.33 d) Investment in Units of Mutual funds Quoted ABSL Fixed Term Plan- Series 5,000,000.00 - 533.43 - OM - Direct - Growth Quoted ABSL Fixed Term Plan- Series 9,260,869.00 9,260,869.00 994.76 931.52 OD - Direct - Growth Quoted ABSL Fixed Term Plan- Series 7,180,656.00 7,180,656.00 773.30 724.32 OH - Direct - Growth Quoted ABSL Fixed Term Plan- Series 10,901,955.00 10,901,955.00 1,171.48 1,096.64 OI - Direct - Growth Quoted ABSL Fixed Term Plan- Series 10,000,000.00 10,000,000.00 1,071.24 1,002.99 OK - Direct - Growth Quoted ABSL Fixed Term Plan- Series 3,000,000.00 - 305.43 - OY - Direct - Growth Quoted DHFL Pramerica Fixed - 6,500,000.00 - 838.89 Maturity Plan Series 63 - Direct - Growth Quoted DSP Blackrock FMP Sr 204 - 10,000,000.00 10,000,000.00 1,072.81 1,006.84 37M - Direct - Growth Quoted DSP Blackrock FMP Sr 205 - 10,000,000.00 10,000,000.00 1,072.30 1,005.75 37M - Direct - Growth Quoted DSP Blackrock FMP Sr 209 - 4,300,000.00 4,300,000.00 459.17 430.49 37M - Direct - Growth Quoted DSP Blackrock FMP Sr 219 - 3,000,000.00 - 304.48 - 40M - Direct - Growth Quoted HDFC FMP 1150D Mar 2018 7,043,577.00 - 711.57 - (1) Sr 39 Direct Growth Quoted HDFC MF FMP1158D 6,000,000.00 607.67 - Feb2018 (1) Sr39-Direct- Growth Quoted HSBC Fixed Term Series 131 3,000,000.00 301.05 - Direct -Growth Quoted ICICI Prudentail FMP Sr 80- 4,493,054.00 4,493,054.00 483.62 452.94 Plan J - 1253 Days Direct Cum 29.07.2020 Quoted ICICI Prudentail FMP Sr 80- 6,000,000.00 6,000,000.00 645.61 604.85 Plan L - 1245 Days Direct Cum 05.08.2020 Quoted ICICI Prudentail FMP Sr 80- 3,000,000.00 3,000,000.00 322.46 302.02 Plan O - 1233 Days Direct Cum 29.07.2020 Quoted ICICI Prudentail FMP Sr 80- 6,500,000.00 6,500,000.00 695.19 651.00 Plan T - 1225 Days Direct Cum 04.08.2020
88 | Annual Report 2017-18 Type Particulars No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted ICICI Prudentail FMP Sr 81 10,000,000.00 - 1,034.76 - - Plan Q - 1163 Days Direct Cum 05.10.2020 Quoted ICICI Prudentail FMP Sr 82 5,000,000.00 - 509.04 - - Plan A - 1236 Days Direct Cum 26.04.2021 Quoted IDFC FTP Sr 129 - Direct- 10,000,000.00 10,000,000.00 1,076.53 1,008.21 Growth 1147Days 24.04.2020 Quoted IDFC FTP Sr 131 - Direct- 12,512,212.00 12,512,212.00 1,339.78 1,253.21 Growth 1139Days 12.05.2020 Quoted Invesco India FMP Sr 29 10,000,000.00 10,000,000.00 1,071.20 1,003.06 -Plan B - Direct -Growth 14.05.2020 Quoted Invesco India FMP Sr 30 5,000,000.00 - 509.23 - -Plan A - Direct -Growth 27.04.2021 Quoted Invesco India FMP Sr 30 Plan 6,000,000.00 609.22 C - Direct-Growth 27.04.2021 Quoted Reliance Fixed Horizon Fund - - 165,632.40 19.48 XXVIII - SR 19-Direct-Growth Quoted Reliance Fixed Horizon Fund - 50,000,000.00 - 508.82 - XXXV - SR 11-Direct-Growth 10.05.2021 Quoted Reliance Fixed Horizon Fund - 40,000,000.00 - 407.31 - XXXV - SR 12-Direct-Growth 10.05.2021 Quoted Sundaram FTP HM - 1100 198,759.00 198,759.00 22.84 21.38 Days-Direct-Growth 18,614.30 12,353.59 Total of Non current investments 36,585.26 28,344.42 (a+b+c+d) Details of Current portion of Long term investments Invesment in Others e) Investment in Units of Mutual funds Quoted ABSL Interval Income Fund - 8,266,208.66 - 1,144.83 Annual Plan 5 - Gr.-Direct Quoted DHFL Pramerica Fixed - 138,027.00 - 17.46 Maturity Plan Series 70 (2 Years)- Direct Plan - Growth Quoted DHFL Pramerica Fixed 6,500,000.00 - 899.95 - Maturity Plan Series 63 - Direct Plan - Growth Quoted DSP BlackRock FMP S161- - 6,549,900.00 - 835.69 12M-Dir-G Mat Dt 20.04.15 Quoted HDFC FMP 370D Apr 2014 (2) 4,079,690.00 - 520.54 - Direct Plan- GR
CDSL | 89 FINANCIAL STATEMENTS - STANDALONE
Type Particulars No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted HDFC FMP 370D Mar2014 (1) 4,384,836.00 - 568.71 - Direct Plan- GR Quoted HDFC FMP 371D Feb 2014(2) 6,000,000.00 - 778.52 Sr 29 - Direct Plan- GR Quoted HDFC FMP 377Days 14,468,207.00 - 1,853.13 March2014 (1) - Direct Plan- GR Quoted ICICI Prudential Fixed 3,284,400.00 - 424.42 Maturity Plan-Series 73-366 days Plan A - Direct Plan- Cum Quoted ICICI Prudential Fixed 12,303,571.00 - 1,572.73 Maturity Plan-Series 73-369 days Plan P - Direct Plan-Cum Quoted ICICI Prudential Fixed 4,793,668.00 - 613.54 Maturity Plan-Series 73-369 days Plan S - Direct Plan- Cum Quoted ICICI Prudential Fixed 5,565,133.00 - 712.06 Maturity Plan-Series 74-369 days Plan I - Direct Plan-Cum Quoted ICICI Prudential Fixed 4,000,000.00 - 503.12 Maturity Plan-Series 74-370 days Plan V - Direct Plan- Cum Quoted Reliance Fixed Horizon Fund - 165,632.40 - 20.89 - XXVIII - SR 19-Direct-Growth Quoted Reliance Fixed Horizon Fund - 5,000,000.00 - 649.64 XXV - Series 24 - Direct Plan Growth Plan Quoted Reliance Fixed Horizon Fund - 4,840,140.49 - 627.39 XXV - Series 26 - Direct Plan Growth Plan Quoted Reliance Fixed Horizon Fund 4,000,000.00 - 402.97 - XXXVI Series 7 - Direct - Growth Quoted Reliance Yearly Interval 4,496,856.79 - 624.47 Fund - Series 5 - Direct Plan Growth Plan Total of Current portion of 1,323.81 11,446.25 Long term investments Details of Current Investments f) Investment in Units of Mutual funds Unquoted Axis Liquid Fund - Direct Plan 57,955.06 - 580.10 - - DDR Unquoted DSP BlackRock Ultra Short 8,913,320.59 - 897.62 Fund- Direct-DDR
90 | Annual Report 2017-18 Type Particulars No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Unquoted HDFC Liquid Fund - Direct- 0.01 - - - DDR Unquoted Invesco India Ultra Short 20,625.18 - 210.16 Term Fund - Direct-DDR Unquoted Invesco India Active Income 24,820.44 505.05 Fund-Direct-Growth Unquoted LIC MF Savings Plus - Direct 626,023.03 - 63.27 - - DDR Unquoted Reliance Money Manager - 139,141.92 - 1,401.85 Direct -DDR Unquoted Reliance Short Term Fund - 8,318,202.89 8,012,167.62 941.63 899.85 Direct - MDR Unquoted Reliance Floating Rate Fund_ 3,885,879.04 3,885,879.04 1,092.20 1,021.70 Short Term Plan Direct Gr Unquoted Sundaram Select Debt Asset 13,809,283.24 13,257,495.82 1,766.41 1,683.79 Plan -Direct-MDR 4,948.66 6,114.97 g) Investment in Units of Mutual funds- Exchange Traded Fund Quoted Sensex Prudential ICICI ETF - 90,000.00 - 275.54 (SPICE) - 275.54 Total of Current 4,948.66 6,390.51 Investments (f+g) Total Investment 42,857.73 46,181.18
7. Loans (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current Unsecured, considered good Loans to staff 9.98 8.17 Total 9.98 8.17 Current Unsecured, considered good Loans to staff 9.90 10.83 Total 9.90 10.83 Note: These financial assets are carried at amortised cost.
CDSL | 91 FINANCIAL STATEMENTS - STANDALONE
8. Other financial assets (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current (a) Sundry deposits Deposits with Related Party - BSE Limited - 72.77 Others 60.54 - (b) Bank balance in deposit accounts 73.85 500.00 (with remaining maturity of more than 12 months, Earmarked `23.85 Lakhs) Total 134.39 572.77 Current (a) Advances to related parties CDSL Commodity Repository Limited - 77.23 (b) Sundry deposits Deposits with Related Party - BSE Limited 72.77 - Others - 15.19 (c) Accrued interest - On bank deposits 72.06 92.72 - On bonds 296.85 296.86 (d) Receivable from selling shareholders 247.16 430.33 (e) Others 0.30 4.99 Total 689.14 917.32
9. Deferred tax balances (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Deferred tax assets 669.26 903.02 Deferred tax liabilities 347.37 674.33 TOTAL 321.89 228.69
92 | Annual Report 2017-18 1.69 45.67 (3.16) 19.53 19.53 271.16 769.34 221.42 124.23 593.52 308.40 367.07 154.78 131.04 326.15 Closing 669.26 347.37 321.89 2,333.74 at March 31, 2018 2,333.74 ( ` in Lakhs) ( ` in Lakhs) balance as ( ` in Lakhs) - - - - 0.24 0.24 0.24 Income in Other As at March 31, 2017 As at March 31, 2017 Recognised - - Comprehensive 285.64 221.42 124.23 593.52 308.40 1,533.21 1,533.21 0.09 0.24 (4.94) 11.89 92.96 (54.64) (186.31) (327.29) (234.00) (326.96) 31, 2018 in Profit or Recognised loss for year ended March
As at March 31, 2018 As at March 31, 2018 as at 1.60 2017 19.29 19.29 653.44 183.15 372.01 142.89 185.68 Closing balance 903.02 674.33 228.69 March 31, ------16.58 16.58 16.58 Income in Other Recognised Comprehensive
- 6.37 0.54 2017 (8.74) 93.02 45.46 16.58 136.11 301.42 (182.43) (165.31) March 31, Profit or loss Recognised in for year ended
as at 2.71 1.06 2.71 2017 97.43 835.87 278.99 179.31 191.89 April 1, balance (89.31) 750.33 839.64 Opening (Investments in bonds) Deferred tax liabilities On changes in fair value of investments Total liabilities Deferred tax assets Provision for compensated absences, gratuity and other employee benefits Provision for incentive scheme for DPs Allowance for doubtful debts (expected credit loss allowance) On difference between book balance and tax of PPE On defined benefit obligation Impact on account of amortised cost accounting of financial assets On defined benefit obligation Net asset / (liabilities) Particulars Tax losses (capital in nature) Total Particulars A.Y. 2017-18 - Capital in Nature A.Y. 2018-19 - Capital in Nature A.Y. 2019-20 - Capital in Nature Particulars A.Y. 2020-21 - Capital in Nature A.Y. 2021-22 - Capital in Nature A.Y. 2022-23 - Capital in Nature Total 2.
A.Y. 2023-24 - Capital in Nature 1.
Note: Unused tax losses (capital in nature) for which no deferred assets have been recognised are attributable to the follo wing: Note: The unrecognised tax credits will expire in following years: Deferred tax assets / (liabilities) in relation to:
CDSL | 93 FINANCIAL STATEMENTS - STANDALONE
10. Income tax asset and liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current tax assets Advance income tax 1,139.98 1,094.92 (net of provisions of ` 10,787.40 Lakhs, March 31, 2017 ` 7,817.59 Lakhs) TOTAL 1,139.98 1,094.92 Current tax liabilities Income tax payable 292.60 361.86 (net of advance tax of ` 7,788.86 Lakhs, March 31, 2017 ` 7,719.47 Lakhs) TOTAL 292.60 361.86
11. Other assets (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non Current Prepaid expenses 92.21 3.05 TOTAL 92.21 3.05 Current Capital advances - 3.11 Prepaid expenses 210.65 107.97 CENVAT / GST credit receivable 167.23 34.33 Advances to creditors 3.83 5.75 TOTAL 381.71 151.17
12. Trade receivables (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 - Secured, considered good - - - Unsecured, considered good 1,131.45 893.21 - Unsecured, considered doubtful 450.00 536.52 Less: Allowance for doubtful debts (expected credit loss allowance) (450.00) (536.52) TOTAL 1,131.45 893.21 1. Trade receivables are dues in respect of services rendered in the normal course of business. 2. The average credit period on sale of services is 25 days. No interest is charged on trade receivables for the first 25 days from the date of invoice. Thereafter, interest is charged at 12 % per annum on the outstanding balance. 3. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a detailed analysis of trade receivables by individual departments. 4. There are no dues by directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member.
94 | Annual Report 2017-18 Movement in the expected credit loss allowance (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of the year 536.52 518.13 Movement in expected credit loss allowance on trade receivables (86.52) 18.39 calculated at lifetime expected credit losses (refer note no. 23) Balance at end of the year 450.00 536.52
13. Cash and cash equivalents and other bank balances For the purpose of statement of cashflows, cash and cash equivalents includes cash on hand, in banks and cheques in hand. Cash and cash equivalents at the end of the reporting period as shown in the statement of cashflow can be reconciled to the related items on the balance sheet as follows: (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Current (a) Cash on hand 0.15 0.21 (b) Cheques, drafts on hand 43.85 - Balance with Banks Owned fund - In current accounts 436.36 119.42 Cash and cash equivalents as per balance sheet 480.36 119.63 Cash and cash equivalents as per statement of cash flows 480.36 119.63 Bank Balances other than above Balances with Banks Owned fund - In deposit accounts (refer note 13.1 below) 1,955.02 1,040.00 Earmarked fund - In current account (refer note 13.2 below) 584.59 - - In current accounts 61.11 1.69 Total 2,600.72 1,041.69 Notes: 13.1. Deposits includes FDRs of ` 368.37 Lakhs as lien maked against bank guarantees 13.2. Earmarked against payable on expenses towords IPO.
CDSL | 95 FINANCIAL STATEMENTS - STANDALONE
14. Equity Share capital Particulars As at As at As at As at March 31, 2018 March 31, 2018 March 31, 2017 March 31, 2017 Number (` in Lakhs) Number (` in Lakhs) Equity Share capital Authorised share capital: Equity Shares of ` 10/- each 150,000,000 15,000.00 150,000,000 15,000.00 with voting rights Issued share capital: Equity Shares of ` 10/- each 104,500,000 10,450.00 104,500,000 10,450.00 with voting rights Subscribed and Paid-up share capital Equity Shares of ` 10/- each 104,500,000 10,450.00 104,500,000 10,450.00 with voting rights Total 104,500,000 10,450.00 104,500,000 10,450.00
Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting year Particulars Opening Balance Fresh issue Closing Balance Equity shares with voting rights As at March 31, 2017 - Number of shares 104,500,000 - 104,500,000 - Amount (`) In Lakhs 10,450.00 - 10,450.00 As at March 31, 2018 - Number of shares 104,500,000 - 104,500,000 - Amount (`) In Lakhs 10,450.00 - 10,450.00
Details of shares held by each shareholders holding more than 5% shares Class of shares / Name of As at As at shareholder March 31, 2018 March 31, 2017 Number of % holding in Number of % holding in shares held that class of shares held that class of shares shares Equity shares with voting rights BSE Limited (Entity having 25,080,000 24.00 52,297,850 50.05 significant influence) HDFC Bank Limited 7,500,000 7.18 7,500,000 7.18 Standard Chartered Bank 7,500,000 7.18 7,500,000 7.18 Canara Bank 6,744,600 6.45 6,744,600 6.45 Bank of India 5,820,000 5.57 5,820,000 5.57 State Bank of India 5,225,000 5.00 10,000,000 9.57 Bank of Baroda - - 5,300,000 5.07 The Company has one class of equity shares having a par value of ` 10 per share. Each shareholder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
96 | Annual Report 2017-18 15. Other equity (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 General reserve 1,094.93 1,094.93 Retained earnings 38,679.60 34,684.56 Total 39,774.53 35,779.49
15.1 General reserve (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of year 1,094.93 1,094.93 Movement during the year - - Balance at end of year 1,094.93 1,094.93
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to Profit or Loss.
15.2 Retained earnings (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of year 34,684.56 31,075.19 Profit for the year 7,768.70 6,785.06 Other comprehensive income / (loss) arising from remeasurement (0.45) (31.34) of defined benefit obligation (net of income tax) Payment of dividends (including tax on dividend) (3,773.21) (3,144.35) Balance at end of year 38,679.60 34,684.56
Retained earnings reflect surplus/deficit after taxes in the Statement of Profit and Loss. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve and also considering the requirements of the Companies Act, 2013. On May 29, 2017, a dividend of ` 3.00 per share (total dividend including dividend distribution tax of ` 3,773.21 Lakhs) was paid to the holders of equity shares. On June 01, 2016, the dividend paid was ` 2.50 per share (total dividend including dividend distribution tax of ` 3,144.35 Lakhs). The Board of Directors, at its meeting on April 21, 2018, have proposed a final dividend of ` 3.50/- per equity share of face value ` 10/- per share for the financial year ended March 31, 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately` 4,402.17 Lakhs, including dividend distribution tax.
CDSL | 97 FINANCIAL STATEMENTS - STANDALONE
16. Other financial liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non Current Accrued employee benefits expense (refer note 16.1 below) 75.93 60.74 TOTAL 75.93 60.74 Current Security deposits 2,254.97 2,281.50 Payable for purchase of Property, plant and equipment 180.80 1.43 Payables on expenses towards IPO (recovered from selling 693.30 - shareholders) (refer note 16.2 below) Others 96.35 38.95 TOTAL 3,225.42 2,321.88 Notes: 16.1. Investments have been earmarked against certain portion of this liability. 16.2. Current accounts have been earmarked against this liability.
17. Trade Payables (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 a. Total outstanding dues of micro enterprises and small - - enterprises (refer note no. 34.2) b. Total outstanding dues of creditors other than micro enterprises and small enterprises - Payable to BSE - 5.31 - Accrued employee benefits expense 843.26 691.96 - Other trade payables 219.77 94.73 Total (a+b) 1,063.03 792.00
18. Provisions (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 (a) Provision for employee benefits Compensated absences (refer note no. 35.2) 278.12 251.37 Provision for gratuity (net) 64.46 78.94 (b) Other provisions Provision for Incentive Scheme for DP (refer note no. 38) 531.51 412.89 Total (a+b) 874.09 743.20
19. Other current liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Income received in advance 58.51 69.47 Advances from customers 784.54 762.44 Statutory remittances 321.26 72.62 Contribution to Investor Protection Fund 408.39 291.00 Total 1,572.70 1,195.53
98 | Annual Report 2017-18 20. Revenue from operations (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 (a) Sale of services (Refer Note (i) below) 15,083.17 12,113.76 (b) Other operating revenues (Refer Note (ii) below) 333.62 48.13 Total 15,416.79 12,161.89 Notes (i) Sale of services comprise : Annual issuer charges 5,562.42 5,171.44 Transaction charges 4,402.59 3,124.66 Users facility charges 341.14 376.73 Settlement charges 162.71 166.22 Account maintenance charges 287.66 267.60 E-Voting charges 409.47 417.70 ECAS charges 642.99 747.19 IPO/Corporate action charges 2,948.67 1,651.53 Others 325.52 190.69 Total - Sale of services 15,083.17 12,113.76 (ii) Other operating revenues comprise : Interest from debtors 35.78 30.97 Advances written back 169.55 - Bad debts recovered / provision written back 128.29 17.16 Total - Other operating revenue 333.62 48.13
21. Other income (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 a) Interest income earned on financial assets that are measured at amortised cost Bank deposits 142.27 340.11 Investments in debt instruments 676.94 677.48 Interest on staff loan 1.66 1.21 b) Dividend from investments in mutual funds (measured at FVTPL) Dividend income from others 296.55 444.37 c) Other gains or losses: Net gain arising on financial assets measured at FVTPL 1,152.54 1,740.59 Gain on sale / disposal of property, plant and equipments and 11.47 10.19 intangible assets (Net) d) Other non-operating income Miscellaneous income 188.90 146.57 Total 2,470.33 3,360.52
CDSL | 99 FINANCIAL STATEMENTS - STANDALONE
22. Employee benefits expense (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Salaries, allowances and bonus 2,432.20 2,068.29 Contribution to provident and other funds 135.67 103.76 Staff welfare expenses 102.38 90.79 Total 2,670.25 2,262.84
23. Impairment loss on financial assets (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Impairment loss allowance on trade receivables - 18.39 Total - 18.39
24. Administration and other expenses (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Annual SEBI fees 154.75 153.27 Bad debts written off 285.42 357.61 Contribution to investor protection fund (refer note no.37) 408.39 459.75 Business promotion expenses 68.40 51.27 Incentive scheme for DPs (refer note no.38) 307.03 288.12 Directors' sitting fees 63.90 39.60 Auditors' remuneration Audit fees 15.00 15.00 Tax audit fees 1.00 1.00 Reimbursement of expenses 0.57 0.69 Insurance 57.90 76.13 Legal, professional and consultancy fees 139.04 115.56 Postage, telephone and communication charges 606.54 469.57 Power and fuel 64.97 64.26 Printing and stationery 23.63 21.57 Rates and taxes 49.52 22.82 Rent 259.54 321.38 Repairs to buildings 149.87 131.86 Computer technology related expenses 908.48 811.71 Travelling and conveyance 116.96 119.61 Water charges 4.05 2.96 Contribution to Corporate social responsibility (refer note no.24.1) 107.22 105.19 ASA/KSA Expenses 64.96 - Miscellaneous expenses 75.17 79.33 Total 3,932.31 3,708.26
100 | Annual Report 2017-18 24.1 CSR Expenditure (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 a) The gross amount required to be spent by the Company during 168.00 130.00 the year b) Amount debited to the statement of profit or loss were paid in cash during the respective year and were incurred for the purpose other than construction / acquisition of any asset.
25. Taxes 25.1. Income tax expense The major components of income tax expense for the year ended March 31, 2018 and 2017 are as under:
25.1.1 Profit or loss section (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Current tax expense 2,962.40 2,700.00 Deferred tax (92.96) (301.41) Total income tax expense recognised in profit or loss 2,869.44 2,398.59
25.1.2 Other comprehensive section (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Remeasurement of the defined benefit plans 0.24 16.58 Total income tax expense recognised in other 0.24 16.58 comprehensive income
25.2 The income tax expense for the year can be reconciled to the accounting profit as follows: (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 (A) Profit before tax 10,638.14 9,183.65 (B) Enacted tax rate in India 34.61% 34.608% (C) Expected tax expenses (A*B) 3,681.86 3,178.28 (D) Other than temporary differences Effect of fair value of investments (586.85) (559.74) Effect of income that is exempt from taxation (336.92) (387.70) Expenses disallowed / (allowed) 111.35 167.75 Total adjustments (812.42) (779.69) (E) Tax expenses after adjustments (C+D) 2,869.44 2,398.59 (F) Tax expenses recognised in Profit or Loss 2,869.44 2,398.59
CDSL | 101 FINANCIAL STATEMENTS - STANDALONE
26. Earnings per share (EPS) Reconciliation of number of equity shares used in the computation of basic and diluted earnings per share is set out below: Particulars For the year ended March 31, 2018 March 31, 2017 Weighted average number of equity shares (issued share capital) 10,45,00,000 10,45,00,000 outstanding during the year for the calculation of basic EPS Effect of dilutive equity shares outstanding during the year - - Weighted average number of equity shares (issued share capital) 10,45,00,000 10,45,00,000 outstanding during the year for the calculation of dilutive EPS Face Value per Share (`) 10/- each 10/- each Profit for the year `( in Lakhs) 7,768.70 6,785.06 Basic and Diluted EPS (` per share) 7.43 6.49
27. Leases 27.1 Obligations under finance lease The Company has building situated at Belapur, Maharashtra which is classified as finance lease. The Company has made an upfront payment and there are no lease obligations to be paid in future periods. Therefore, disclosures with respect to Minimum lease payments and Present value of Minimum lease payments have not been given.
27.2 Operating lease arrangements Lease payments recognised in the profit or loss for the year is` 180.70 Lakhs (year ended March 31, 2017 ` 259.81 Lakhs). The agreements are executed for a period ranging from 12 to 60 months with renewable clause and also provide for termination at will by either party giving a prior notice period between 1 to 3 months.
28. Financial instruments The carrying value and fair value of financial instruments by categories: (` in Lakhs) Particulars Carrying Value Fair Value March 31, March 31, March 31, March 31, 2018 2017 2018 2017 i) Financial assets a) Amortised Cost Investment in debt instruments 9,040.46 9,055.33 9,040.46 9,055.33 Trade receivables 1,131.45 893.21 1,131.45 893.21 Cash and cash equivalents 480.36 119.63 480.36 119.63 Bank balances other than cash and cash 2,600.72 1,041.69 2,600.72 1,041.69 equivalents Loans 19.88 19.00 19.88 19.00 Other financial assets 823.53 1,490.09 823.53 1,490.09 Total 14,096.40 12,618.95 14,096.40 12,618.95 b) FVTPL Investment in equity instruments 300.50 300.50 300.50 300.50 Investment in mutual funds 24,886.77 30,190.35 24,886.77 30,190.35 Total 25,187.27 30,490.85 25,187.27 30,490.85 c) Others Investment in subsidiaries 8,630.00 6,635.00 8,630.00 6,635.00 ii) Financial liabilities a) Amortised Cost Trade payables 1,063.03 792.00 1,063.03 792.00 Other financial liabilities 3,301.35 2,382.62 3,301.35 2,382.62 Total 4,364.38 3,174.62 4,364.38 3,174.62
102 | Annual Report 2017-18 Fair value hierarchy Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
Fair value of the Company’s financial assets that are measured at fair value on a recurring basis: (` in Lakhs) Financial assets Fair value as at Fair value Valuation technique(s) March 31, March 31, hierarchy and key input(s) 2018 2017 Investments in equity instruments 300.50 300.50 Level 3 Discounted cash flows Investments in mutual funds 24,886.77 29,914.81 Level 2 NAV declared by respective mutual funds Investments in exchange traded - 275.54 Level 2 NAV declared by funds respective mutual funds
There were no transfers between Level 1 and 2 during the years.
The management assessed that fair value of cash and bank balances, fixed deposits, trade receivables, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: The fair value of the quoted bonds and mutual fund are based on price quotations at reporting date. The fair value of unquoted instruments and other financial liabilities, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The fair values of the unquoted equity shares have been estimated using a discounted cash flow model. The valuation requires the management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility, the probabilities of the various estimates within the range can be reasonably assessed and are used in the management’s estimate of fair value for these unquoted equity investments.
29. Financial risk management The Company’s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to support its operations. The Company’s principal financial assets include trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including foreign currency and interest rate risk) and regulatory risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.
CDSL | 103 FINANCIAL STATEMENTS - STANDALONE
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
• Trade and other receivables The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The demographics of the customer, including the default risk of the industry in which the customer operates, also has an influence on credit risk assessment.
None of the customers accounted for more than 10% of the receivables for the years ended March 31, 2018 and March 31, 2017 and revenue for the years ended March 31, 2018 and March 31, 2017.
• Investments The Company limits its exposure to credit risk by making investment as per the investment policy. Further investment committee of the Company review the investment portfolio on monthly basis and recommend or provide suggestion to the management. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.
Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. The management monitors the Company’s net liquidity position through forecasts on the basis of expected cash flows.
The table below provides details regarding the contractual maturities of significant financial liabilities as at March 31, 2018 and March 31, 2017. (` in Lakhs) Particulars As at March 31, 2018 March 31, 2017 Trade payables < 1 year 1,063.03 792.00 1-5 years - - > 5 years - - Other financial liabilities < 1 year 3,116.71 40.38 1-5 years 75.93 2,342.24 > 5 years - - Total 3,192.64 3,174.62
104 | Annual Report 2017-18 The table below provides details regarding the contractual maturities of significant financial assets as at March 31, 2018 and March 31, 2017. (` in Lakhs) Particulars As at March 31, 2018 March 31, 2017 Investments* < 1 year 6,272.47 17,836.79 1 - 5 years 23,193.12 14,136.81 > 5 years 4,762.14 7,572.58 Total 34,227.73 39,546.18 Loans < 1 year 9.90 10.83 1 - 5 years 9.98 8.17 > 5 years - - Total 19.88 19.00 Other financial assets < 1 year 689.14 917.32 1 - 5 years 134.39 572.77 > 5 years - - Total 823.53 1,490.09 Trade receivables < 1 year 1,131.45 893.21 1 - 5 years - - > 5 years - - Total 1,131.45 893.21 Cash and cash equivalents < 1 year 480.36 119.83 1 - 5 years - - > 5 years - - Total 480.36 119.83 Bank balances other than cash and cash equivalents < 1 year 2,600.72 1,041.69 1 - 5 years - - > 5 years - - Total 2,600.72 1,041.69 * Investment does not include investments in equity instruments of subsidiaries. The Company manages contractual financial liabilities and contractual financial assets on net basis.
Market risk The Company’s business, financial condition and results of operations are highly dependent upon the levels of activity in the capital markets and in particular upon the trading volume on stock exchanges, the number of listed securities, the number of new listings and subsequent issuances and introduction of new services which will ease in doing business in capital markets. Our securities depository business competes closely with our competitor for DPs, investor accounts and number of instruments on our systems. We rely heavily on technological equipment and IT at our facilities. Interruptions in the availability of IT systems could adversely impact our business. Shift in consumer preferences away from investing in securities market to other financial products, may dampen prospects of our business.
CDSL | 105 FINANCIAL STATEMENTS - STANDALONE
• Foreign Currency risk The Company’s foreign currency risk arises in respect of foreign currency transactions. The Company’s foreign currency expenses is insignificant, while a significant portion of its costs are in Indian rupees. As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company’s expenses measured in rupees may decrease. Due to lessor quantum of expenses from foreign currencies, the Company is not much exposed to foreign currency risk.
• Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term / short- term investment with floating interest rates. Interest rate risk primarily arises from floating rate investment. The Company’s investments in floating rate are primarily in FMPs of mutual funds, which do not expose it to significant interest rate risk. There is also a reinvestment risk in the current scenario, as the rates are going downwards.
Regulatory risk The Company requires various regulatory approvals, registrations and permissions to operate its business, including at a corporate level as well as at the level of each of it’s components. Some of these approvals are required to be renewed from time to time. The Company’s operations are subject to continued review by regulator and these regulations may change from time to time in fast changing capital market environment. The Company’s compliance team constantly monitors the compliance with these rules and regulations.
30. Capital management The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the returnon capital as well as the level of dividends on its equity shares. The Company’s objective when managing capital is to maintain an optimal structure so as to maximise shareholder value. The Company is predominantly equity financed which is evident from the capital structure. Further, the Company has always been a net cash company with cash and bank balances along with investment which is predominantly investment in liquid and short term mutual funds being far in excess of financial liabilities.
31. Information on related party transactions as required by Ind AS 24 – ‘Related party disclosures’ for the year ended 31st March, 2018. Description of relationship Name of the related party Subsidiaries CDSL Ventures Limited CDSL Insurance Repository Limited CDSL Commodity Repository Limited Entity having significant influence (from 30.06.2017) BSE Limited (Parent Company up to 29.06.2017) Subsidiaries of the entity having significant influence Marketplace Technologies Private Limited (from 30.06.2017) Indian Clearing Corporation Limited (Fellow Subsidiaries up to 29.06.2017)
106 | Annual Report 2017-18 Description of relationship Name of the related party Key Management Personnel (KMP) Shri P. S. Reddy - MD & CEO Shri T S Krishna Murthy Shri R. M. Malla (appointed w.e.f. July 30, 2016) Shri B. Prasada Rao (appointed w.e.f. October 21, 2016) Smt Jayshree Vyas (ceased to be director w.e.f. January 17, 2017) Shri A. Krishna Kumar (appointed w.e.f. July 30, 2016) Smt Usha Narayanan (appointed w.e.f. April 24, 2017) Shri C. Venkat Nageswar (appointed w.e.f. June 28, 2016) Smt Nehal Vora Shri Nayan Mehta Shri K.V. Subramanian
Details of related party transactions (` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 BSE Limited Rendering of services 384.69 180.70 Receiving of services 240.83 248.33 License agreements-Rent and Maintenance 173.63 298.56 Dividend Paid 1,568.94 1,415.87 Balances outstanding at the end of the year Trade receivables 24.66 41.90 Loans and advances-Deposits given 72.77 72.77 Trade payables - 5.31 CDSL Ventures Limited Rendering of services 289.57 157.36 Receiving of services 8.27 5.02 Sale of Property, plant and equipment 15.31 - Balances outstanding at the end of the year - - CDSL Insurance Repository Limited Rendering of services 30.24 28.56 Receiving of services - 3.71 Balances outstanding at the end of the year - - CDSL Commodity Repository Limited Expenses incurred 234.10 77.23 Equity shares subscribed 1,995.00 3,005.00 Balances outstanding at the end of the year Expenses recoverable - 77.23 Equity shares subscribed 5,000.00 3,005.00
CDSL | 107 FINANCIAL STATEMENTS - STANDALONE
(` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 Marketplace Technologies Private Limited Rendering of services 0.11 0.17 Receiving of services 15.72 13.09 Balances outstanding at the end of the year Trade payables - 2.24 Indian Clearing Corporation Limited Rendering of services 6.61 6.00 Balances outstanding at the end of the year Trade receivables 0.07 0.04 KMP The remuneration of directors and other members of key management personnel during the year is as follows: • Shri P. S. Reddy 144.54 114.35
32. Contingent liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Claims against the Company not acknowledged as debt in respect of : a) Service tax matters 3,978.81 3,984.72 (refer note (refer note (i),(ii), (i),(ii),(iii) and (iv)) (iii) and (iv)) b) Income tax matters 4.92 4.92 (refer note (v)) (refer note (v)) (i) The Company is a party in certain legal proceedings filed by beneficial owners/third parties in the normal course of business. The Company does not expect the outcome of these proceedings to have any material adverse effect on its financial conditions, results of operations and cash flow. The amount is not ascertainable. (ii) The Commissioner of Service Tax, Mumbai has issued Order on 19th August 2016 to CDSL demanding service tax amount of ` 2,112.18 Lakhs and Penalty of ` 1,866.63 Lakhs. (iii) The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 23rd April 2012 to CDSL demanding service tax amount of ` 5.91 Lakhs on the charges recovered by CDSL for wrong availment of Cenvat Credit on Group Mediclaim policy in respect of staff for FY 2007-08 to FY 2011-12. Order has been issued on 20th December, 2017 by Commissioner (Appeals)-I CGST& CX, Mumbai, allowing CENVAT credit of ` 5.91 Lakhs in companies favour. (iv) Claims against the Company not acknowledged as debt : Service Tax The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 21st October 2009 to CDSL demanding service tax amount of ` 1,791 Lakhs on the charges recovered by CDSL for providing “Depository services” to DPs and RTAs for the period 2004-05 to 2008-09. The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 4th October 2010 to CDSL demanding service tax amount of ` 465 Lakhs on the charges recovered by CDSL for providing “Depository services” to DPs and RTAs for the period 2009-10. (v) Claims against the Company not acknowledged as debt : Income Tax Appeal pending with Commissioner of Income Tax (Appeals) for the AY 2011-12 amounting to ` 4.92 Lakhs.
108 | Annual Report 2017-18 33. Commitments (` In Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 (a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 3.33 116.59 Intangible assets 355.00 34.34 (b) Other commitments 31.63 249.44
34. Additional information to the financial statements 34.1 Expenditure in foreign currency: (` In Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Travelling Expenses 19.25 25.15 Others 8.18 78.67
34.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 Particulars As at As at March 31, 2018 March 31, 2017 (a) Principal amount and interest thereon remaining unpaid - - at the end of year Interest paid including payment made beyond appointed day (b) Interest due and payable for delay during the year - - (c) Amount of interest accrued and unpaid as at year end - - (d) The amount of further interest due and payable even in - - the succeeding year
35. Employee benefits 35.1 Defined benefits plan – Gratuity Gratuity is administered through Gratuity Scheme with Life Insurance Corporation of India. The LIC raises demand for annual contribution for gratuity amount based on its own computation without providing entire details as required by the Ind AS 19 “Employee Benefits”. Hence the Company obtains separate actuarial valuation report as required under Ind AS 19 “Employee Benefits” from an independent Actuary. The maximum amount as per these two valuation reports is recognised as liability in the books of accounts. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligations.
CDSL | 109 FINANCIAL STATEMENTS - STANDALONE
Such plan exposes the Group to actuarial risks such as: investment risk, interest rate risk, demographic risk and salary risk. Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in equity securities and debt instruments. Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments. Demographic risk This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
The following table sets out the funded status of the Gratuity benefit scheme and the amount recognised in the Financial Statements as at March 31, 2018 and 2017. (` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Changes in present value of obligations (PVO) PVO at beginning of year 221.96 161.56 Interest cost 14.51 11.80 Current Service Cost 20.96 15.53 Past Service Cost - (non vested benefits) - - Past Service Cost - (vested benefits) 33.03 - Benefits Paid (10.00) (8.99) Transfer in - - Transfer out - - Contributions by plan participants - - Business Combinations - - Curtailments - - Settlements - - Actuarial (Gain)/Loss on obligation (13.21) 42.07 PVO at end of year 267.25 221.96 Interest Expenses Interest cost 14.51 11.80 Fair Value of Plan Assets Fair Value of Plan Assets at the beginning 143.02 144.87 Interest Income 13.90 10.63 Net Liability PVO at beginning of year 221.96 161.56 Fair Value of the Assets at beginning report 143.02 144.87 Net Liability 78.94 16.70
110 | Annual Report 2017-18 (` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Net Interest Interest Expenses 14.51 11.80 Interest Income 13.90 10.63 Net Interest 0.61 1.16 Actual return on plan assets - 4.78 Less Interest income included above 13.90 10.63 Return on plan assets excluding interest income (13.90) (5.86) Actuarial (Gain)/loss on obligation Due to Demographic Assumption 9.65 2.38 Due to Financial Assumption (21.43) 16.94 Due to Experience (1.44) 22.74 Total Actuarial (Gain)/Loss (13.21) 42.07 Fair Value of Plan Assets Opening Fair Value of Plan Asset 143.02 144.87 Adjustment to Opening Fair Value of Plan Asset 69.77 - Return on Plan Assets excl. interest income (13.90) (5.86) Interest Income 13.90 10.63 Contributions by Employer 2.38 2.38 Contributions by Employee - - Benefits Paid (10.00) (8.99) Fair Value of Plan Assets at end 202.79 143.02 Past Service Cost Recognised Past Service Cost- (non vested benefits) - - Past Service Cost -(vested benefits) - - Average remaining future service till vesting of the benefit 33.03 - Recognised Past service Cost- non vested benefits - - Recognised Past service Cost- vested benefits 33.03 - Unrecognised Past Service Cost- non vested benefits - - Amounts to be recognised in the Balance Sheet PVO at end of year 267.25 221.96 Fair Value of Plan Assets at end of year 202.79 143.02 Funded Status (64.46) (78.94) Adjustments - - Net Asset/(Liability) recognised in the balance sheet (64.46) (78.94) Expense recognised in the profit or loss Current Service Cost 20.96 15.53 Net Interest 0.61 1.16 Past Service Cost- (non vested benefits) - - Past Service Cost -(vested benefits) 33.03 - Curtailment Effect - - Settlement Effect - - Expense recognised in the profit or loss 54.60 16.70
CDSL | 111 FINANCIAL STATEMENTS - STANDALONE
(` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Expense recognised in the Other Comprehensive Income (OCI) Actuarial (Gain)/Loss recognised for the year (13.21) 42.07 Asset limit effect - - Return on Plan Assets excluding net interest 13.90 5.86 Unrecognised Actuarial (Gain)/Loss from previous year - - Total Actuarial (Gain)/Loss recognised in (OCI) 0.69 47.92 Movements in the Liability recognised in Balance Sheet Opening Net Liability 78.94 16.70 Adjustment to opening balance (69.77) - Expenses as above 54.60 16.70 Contribution paid (2.38) Other Comprehensive Income(OCI) 0.69 47.92 Closing Net Liability 64.46 78.94 Projected Service Cost March 31, 2018 - - Asset Information Gratuity Fund (LIC)* 100% 100%
* The details of the composition of the plan asset, by category, from the insurer have not been received and hence the disclosures as required by Ind AS 19- Employee Benefits have not been given. (` in Lakhs)
Assumptions as at March 31, 2018 March 31, 2017 Mortality Interest / Discount Rate 7.63% 6.69% Rate of increase in compensation 4.00% 4.00% Annual increase in healthcare costs Future Changes in maximum state healthcare benefits Expected average remaining service (years) 13.36 15.84 Employee Attrition Rate (Past Service (PS)) PS: 0 to 42: PS: 0 to 42: 3.54% 2.16%
Sensitivity Analysis (` in Lakhs) DR : Discount Rate ER: Salary Escalation Rate PVO DR+1% PVO DR-1% PVO ER+1% PVO ER-1% PVO 247.32 290.05 287.72 248.97
Expected Payout (` in Lakhs) Year Expected Expected Expected Expected Expected Expected Outgo First Outgo Outgo Outgo Outgo Fifth Outgo Six to Second Third Fourth Ten Years PVO payouts 22.86 43.13 23.78 19.47 51.50 129.47
112 | Annual Report 2017-18 Asset Liability Comparisons (` in Lakhs) Year March March March March March 31, 2014 31, 2015 31, 2016 31, 2017 31, 2018 PVO at end of year 112.58 133.89 161.56 221.96 267.25 Plan assets 107.95 126.13 144.87 143.02 202.79 Surplus/ (Deficit) (4.63) (7.76) 16.70 (78.94) (64.46) Experience adjustments on 0.36 1.43 0.52 (5.86) (13.90) plan assets
35.2 Compensated absences The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilised accumulating compensated absences and utilise it in future periods or receive cash at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognises accumulated compensated absences based on actuarial valuation. Non-accumulating compensated absences are recognised in the period in which the absences occur. The Company recognises actuarial gains or losses immediately in the statement of profit and loss. During the year ended March 31, 2018 an amount recognised as an expenses in respect of compensated leave absences is ` 26.75 Lakhs, (Previous year ended March 31, 2017 is ` 52.32 Lakhs).
36. SEBI had issued Depositories and Participants (Amendment) Regulations, 2012 on September 11, 2012 (the “2012 Regulations”). According to the 2012 Regulations, depositories were required to establish and maintain an Investor Protection Fund (the “IPF”) for the protection of interest of beneficial owners and every depository was required to credit 25% of its profits every year to the Investor Protection Fund. On January 21, 2016, SEBI has issued the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2016 (the “Amended Regulations”). According to these Amended Regulations, every depository shall credit 5% or such percentage as may be specified by the Board, of its profits from depository operations every year to the IPF. These Amended Regulations shall be deemed to have come into force from September 11, 2012.
37. From the year ended March 31, 2016 onwards, the Company has determined the IPF contribution at 5% of profit from depository operation after making such contribution according to the Amended Regulations. The profit from depository operations has been determined by reducing the other income for theyear from the Net profit before exceptional items and tax for the year after making such contribution. From FY 2012-13 to FY 2014-15 however, as per the 2012 Regulations, the Company calculated IPF contribution at 25% of the profits of the Company before tax, available after making such contribution. The amount contributed to IPF determined over the reported period is as under:
Table showing movement of IPF provision: (` in Lakhs) Particular For the year For the year ended ended March 31, 2018 March 31, 2017 Rate % 5 5 Opening provision 291.00 773.11 Add: Provision made during the year 408.39 459.75* Less: Amount transferred to IPF Trust during the Year 291.00 941.86* Closing Provision 408.39 291.00 * During the year ended March 31, 2017, the Company has also contributed a sum of ` 168.75 Lakhs being the interest income from investments to be contributed to the IPF pursuant to SEBI Circular SEBI/HO/MRD/DP/CIR/P/2016/58 dated June 07, 2016. Thus, the total contribution during the year ended March 31, 2017 amounts to ` 459.75 Lakhs. CDSL | 113 FINANCIAL STATEMENTS - STANDALONE
38. SEBI vide its circular no. CIR/MRD/DP/18/2015 dated December 9, 2015 (the “Circular”) has revised the annual custody/issuer charges to be collected by the depositories from the issuers with effect from financial year 2015-16. With an objective of promoting financial inclusion and expanding thereach of depository services through depository participants (DPs) in tier II and tier III towns, the Circular recommends that the Depository Participants (DPs) be incentivised by way of two schemes. In the first scheme, the depositories shall pay the DPs an incentive of ` 100/- for every new Basic Services Demat Accounts (BSDA) opened by their participants in specified cities mentioned in the Circular. In the second scheme, the depositories may pay ` 2 per folio per ISIN to the respective depository participants (DPs), in respect of the ISIN positions held in BSDA across all BSDA accounts in the depository. In order to manage the aforementioned incentive schemes, the Circular has directed the Depositories to set aside 20% of the incremental revenue received from the issuers. Pursuant to the Circular, the Company has set aside ` 307.03 Lakhs during the year ended March 31, 2018 (` 288.12 Lakhs during the year ended March 31, 2017) being 20% of the incremental revenue received from issuers during the respective years, towards the DP incentive scheme. Table showing movement of DP incentive provision: (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Opening provision 412.89 281.52 Provision for DP incentive made during the year 307.03 288.12 Amount paid (188.41) (156.75) Closing provision 531.51 412.89
39. The Managing Director (MD) and CEO of the Company, has been identified as the chief operating decision maker (CODM) as defined by Indian Accounting Standard 108 “Operating Segments”. The CODM evaluates the Company’s performance, allocates resources based on analysis of the various performance indicators of the Company as a single unit. The principal business of the Company is of “Depository Services”. All other activities of the Company revolve around its principal business. Therefore, directors have concluded that there is only one operating reportable segment as per Indian Accounting Standard 108 “Operating Segments”.
39.1 Information about services: - Refer note 1 39.2 Information about geographical areas: There is no revenue from external customers and non- current assets outside India.
39.3 Information about customers: No single external customer amounts to 10% or more of Company’s revenue.
Signatures to Notes 1 to 39
For and on behalf of the Board of Directors T. S. Krishna Murthy P. S. Reddy Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 Amol Purandare Bharat Sheth Place : Mumbai Company Secretary Chief Financial Officer Date : April 21, 2018 M No. A18078
114 | Annual Report 2017-18 INDEPENDENT AUDITORS’ REPORT
To The Members of the preparation and presentation of the consolidated CENTRAL DEPOSITORY SERVICES (INDIA) Ind AS financial statements that give a true and fair Limited view and are free from material misstatement, whether due to fraud or error, which have been used for the Report on the Consolidated Ind AS Financial purpose of preparation of the consolidated Ind AS Statements financial statements by the Directors of the Parent, as aforesaid. We have audited the accompanying consolidated Ind AS financial statements of CENTRAL DEPOSITORY Auditors’ Responsibility SERVICES (INDIA) Limited (hereinafter referred to as the “Parent”) and its subsidiaries (the Parent Our responsibility is to express an opinion on these and its subsidiaries together referred to as “the consolidated Ind AS financial statements based on Group”), comprising the Consolidated Balance Sheet our audit. In conducting our audit, we have taken into as at March 31, 2018, the Consolidated Statement account the provisions of the Act, the accounting and of Profit and Loss (including other comprehensive auditing standards and matters which are required to income), the Consolidated Cash Flow Statement, the be included in the audit report under the provisions of Consolidated Statement of Changes in Equity, for the the Act and the Rules made thereunder. year then ended, and a summary of the significant accounting policies and other explanatory information We conducted our audit in accordance with the (hereinafter referred to as “the consolidated Ind AS Standards on Auditing specified under Section 143(10) financial statements”). of the Act. Those Standards require that we comply with ethical requirements and plan and perform the Management’s Responsibility for the Consolidated audit to obtain reasonable assurance about whether Ind AS Financial Statements the consolidated Ind AS financial statements are free from material misstatement. The Parent’s Board of Directors is responsible for the preparation of these consolidated Ind AS financial An audit involves performing procedures to obtain statements in terms of the requirements of the audit evidence about the amounts and the disclosures Companies Act, 2013 (hereinafter referred to as “the in the consolidated Ind AS financial statements. Act”) that give a true and fair view of the consolidated The procedures selected depend on the auditor’s financial position, consolidated financial performance judgment, including the assessment of the risks of including other comprehensive income, consolidated material misstatement of the consolidated Ind AS cash flows and consolidated statement of changes financial statements, whether due to fraud or error. In in equity of the Group in accordance with the Indian making those risk assessments, the auditor considers Accounting Standards (Ind AS) prescribed under internal financial control relevant to the Parent’s section 133 of the Act read with the Companies (Indian preparation of the consolidated Ind AS financial Accounting Standards) Rules, 2015, as amended, and statements that give a true and fair view in order to other accounting principles generally accepted in India. design audit procedures that are appropriate in the The respective Board of Directors of the companies circumstances. An audit also includes evaluating included in the Group are responsible for maintenance the appropriateness of the accounting policies used of adequate accounting records in accordance with and the reasonableness of the accounting estimates the provisions of the Act for safeguarding the assets made by the Parent’s Board of Directors, as well as of the Group and for preventing and detecting frauds evaluating the overall presentation of the consolidated and other irregularities; the selection and application Ind AS financial statements. of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; We believe that the audit evidence obtained by us and and the design, implementation and maintenance other auditors in terms of their reports referred to in of adequate internal financial controls, that were the Other Matter paragraph below, is sufficient and operating effectively for ensuring the accuracy and appropriate to provide a basis for our audit opinion on completeness of the accounting records, relevant to the consolidated Ind AS financial statements.
CDSL | 115 FINANCIAL STATEMENTS - CONSOLIDATED
Opinion knowledge and belief were necessary for the In our opinion and to the best of our information and purposes of our audit of the aforesaid consolidated according to the explanations given to us and based Ind AS financial statements. on the consideration of reports of the other auditors (b) In our opinion, proper books of account as on separate financial statements of the subsidiaries required by law relating to preparation of referred to below in the Other Matter paragraph, the the aforesaid consolidated Ind AS financial aforesaid consolidated Ind AS financial statements statements have been kept so far as it appears give the information required by the Act in the manner from our examination of those books and the so required and give a true and fair view in conformity reports of the other auditors. with the Ind AS and other accounting principles generally accepted in India, of the consolidated (c) The Consolidated Balance Sheet, the Consolidated state of affairs of the Group as at March 31, 2018, Statement of Profit and Loss (including Other and their consolidated profit, consolidated total Comprehensive Income), the Consolidated Cash comprehensive income, their consolidated cash flows Flow Statement and Consolidated Statement of and consolidated statement of changes in equity for Changes in Equity dealt with by this Report are the year ended on that date. in agreement with the relevant books of account maintained for the purpose of preparation of the Other Matter consolidated Ind AS financial statements. We did not audit the financial statements of three subsidiaries, whose financial statements reflect total (d) In our opinion, the aforesaid consolidated Ind assets of ` 20,700.82 Lakhs as at March 31, 2018, AS financial statements comply with the Indian total revenues of `4,796.96 Lakhs and net cash Accounting Standards prescribed under Section inflows amounting to` 93.74 Lakhs for the year ended 133 of the Act. on that date, as considered in the consolidated Ind AS financial statements. These financial statements (e) On the basis of the written representations have been audited by other auditors whose reports received from the directors of the Parent and have been furnished to us by the Management and taken on record by the Board of Directors of the our opinion on the consolidated Ind AS financial Parent and the reports of the statutory auditors statements, in so far as it relates to the amounts and of its subsidiary companies incorporated in India, disclosures included in respect of these subsidiaries ,none of the directors of the Group companies and our report in terms of sub-section (3) of Section incorporated in India is disqualified as on March 143 of the Act, in so far as it relates to the aforesaid 31, 2018 from being appointed as a director in subsidiaries is based solely on the reports of the other terms of Section 164 (2) of the Act. auditors. (f) With respect to the adequacy of the internal Our opinion on the consolidated Ind AS financial financial controls over financial reporting and statements above and our report on Other Legal the operating effectiveness of such controls, refer and Regulatory Requirements below, is not modified to our separate Report in “Annexure A”, which is in respect of the above matter with respect to our based on the auditors’ reports of the Parent and reliance on the work done and the reports of the other subsidiary companies incorporated in India. Our auditors. report expresses an unmodified opinion on the adequacy and operating effectiveness of internal Report on Other Legal and Regulatory financial controls over financial reporting of those Requirements companies, for the reasons stated therein. As required by Section 143(3) of the Act, based on our audit and on the consideration of the report of (g) With respect to the other matters to be included the other auditors on separate financial statements in the Auditor’s Report in accordance with Rule and the other financial information of subsidiaries 11 of the Companies (Audit and Auditor’s) Rules, incorporated in India, referred in the Other Matter 2014, as amended, in our opinion and to the paragraph above we report, to the extent applicable, best of our information and according to the that: explanations given to us:
(a) We have sought and obtained all the information i. The consolidated Ind AS financial statements and explanations which to the best of our disclose the impact of pending litigations
116 | Annual Report 2017-18 as at March 31, 2018, on the consolidated The Group does not have any outstanding financial position of the Group. derivative contracts as at March 31, 2018. ii. The Group has made provision, as required iii. There were no amounts which were required under the applicable law or accounting to be transferred to the Investor Education standards, for material foreseeable losses on and Protection Fund by the Parent and its long term contracts as at March 31, 2018. subsidiary companies incorporated in India.
For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 117365W)
G. K. Subramaniam Partner MUMBAI, April 21, 2018 (Membership No. 109839)
CDSL | 117 FINANCIAL STATEMENTS - CONSOLIDATED
ANNEXURE “A” TO THE INDEPENDENT AUDITORS’ REPORT (Referred to in paragraph (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
Report on the Internal Financial Controls Over assurance about whether adequate internal financial Financial Reporting under Clause (i) of Sub-section controls over financial reporting was established and 3 of Section 143 of the Act maintained and if such controls operated effectively in In conjunction with our audit of the consolidated Ind all material respects. AS financial statements of the Company as of and for the year ended March 31, 2018, we have audited Our audit involves performing procedures to obtain the internal financial controls over financial reporting audit evidence about the adequacy of the internal of CENTRAL DEPOSITORY SERVICES (INDIA) financial controls system over financial reporting and Limited (hereinafter referred to as the “Parent”) their operating effectiveness. Our audit of internal and its subsidiary companies, which are companies financial controls over financial reporting included incorporated in India, as of that date. obtaining an understanding of internal financial controls over financial reporting, assessing the risk Management’s Responsibility for Internal that a material weakness exists, and testing and Financial Controls evaluating the design and operating effectiveness of internal control based on the assessed risk. The respective Board of Directors of the Parent, The procedures selected depend on the auditor’s its subsidiary companies, which are companies judgement, including the assessment of the risks of incorporated in India, are responsible for establishing material misstatement of the financial statements, and maintaining internal financial controls based on whether due to fraud or error. the internal control over financial reporting criteria established by the respective Companies considering We believe that the audit evidence we have obtained the essential components of internal control stated and the audit evidence obtained by the other auditors in the Guidance Note on Audit of Internal Financial of the subsidiary companies, which are companies Controls Over Financial Reporting issued by the incorporated in India, in terms of their reports referred Institute of Chartered Accountants of India (ICAI). These to in the Other Matters paragraph below, is sufficient responsibilities include the design, implementation and appropriate to provide a basis for our audit and maintenance of adequate internal financial opinion on the internal financial controls system over controls that were operating effectively for ensuring financial reporting of the Parent and its subsidiary the orderly and efficient conduct of its business, companies, which are companies incorporated in including adherence to the respective company’s India. policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and Meaning of Internal Financial Controls Over completeness of the accounting records, and the Financial Reporting timely preparation of reliable financial information, as required under the Companies Act, 2013. A company’s internal financial control over financial reporting is a process designed to provide reasonable Auditor’s Responsibility assurance regarding the reliability of financial reporting and the preparation of financial statements Our responsibility is to express an opinion on the for external purposes in accordance with generally internal financial controls over financial reporting accepted accounting principles. A company’s internal of the Parent and its subsidiary companies, which financial control over financial reporting includes are companies incorporated in India, based on our those policies and procedures that (1) pertain to audit. We conducted our audit in accordance with the the maintenance of records that, in reasonable Guidance Note on Audit of Internal Financial Controls detail, accurately and fairly reflect the transactions Over Financial Reporting (the “Guidance Note”) issued and dispositions of the assets of the company; (2) by the Institute of Chartered Accountants of India provide reasonable assurance that transactions and the Standards on Auditing, prescribed under are recorded as necessary to permit preparation of Section 143(10) of the Companies Act, 2013, to the financial statements in accordance with generally extent applicable to an audit of internal financial accepted accounting principles, and that receipts and controls. Those Standards and the Guidance Note expenditures of the company are being made only in require that we comply with ethical requirements accordance with authorisations of management and and plan and perform the audit to obtain reasonable
118 | Annual Report 2017-18 ANNEXURE “B” TO THE INDEPENDENT AUDITORS’ REPORT (Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) directors of the company; and (3) provide reasonable on the consideration of the reports of the other assurance regarding prevention or timely detection of auditors referred to in the Other Matters paragraph unauthorised acquisition, use, or disposition of the below, the Parent and its subsidiary companies, company’s assets that could have a material effect on which are companies incorporated in India, have, in the financial statements. all material respects, an adequate internal financial controls system over financial reporting and such Inherent Limitations of Internal Financial Controls internal financial controls over financial reporting Over Financial Reporting were operating effectively as at March 31, 2018, Because of the inherent limitations of internal based on the criteria for internal financial control over financial reporting established by the respective financial controls over financial reporting, including companies considering the essential components of the possibility of collusion or improper management internal control stated in the Guidance Note issued override of controls, material misstatements due to by the ICAI. error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial Other Matter controls over financial reporting to future periods are subject to the risk that the internal financial Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of control over financial reporting may become the internal financial controls over financial reporting inadequate because of changes in conditions, or insofar as it relates to three subsidiary companies, that the degree of compliance with the policies or which are companies incorporated in India, is based procedures may deteriorate. solely on the corresponding reports of the auditors of such companies incorporated in India. Opinion In our opinion to the best of our information and Our opinion is not modified in respect of the according to the explanations given to us and based above matter.
For DELOITTE HASKINS & SELLS Chartered Accountants (Firm’s Registration No. 117365W)
G. K. Subramaniam Partner MUMBAI, April 21, 2018 (Membership No. 109839)
CDSL | 119 FINANCIAL STATEMENTS - CONSOLIDATED
CONSOLIDATED balance sheet as at march 31, 2018
(` in Lakhs) Particulars Note As at As at No. March 31, 2018 March 31, 2017 (Audited) (Audited) ASSETS 1 Non-current assets a. Property, plant and equipment 3 7,463.79 465.33 b. Other Intangible assets 4 145.35 57.10 c. Intangible assets under development - 25.50 d. Financial Assets i. Investments 5 35,874.81 27,289.77 ii. Loans 6 9.98 8.17 iii. Other financial assets 7 803.68 952.77 e. Deferred tax assets (net) 8 321.89 228.69 f. Income tax assets (net) 9 1,370.69 1,312.58 g. Other assets 10 103.70 6.16 Total Non-Current Assets 46,093.89 30,346.07 2 Current assets a. Financial Assets i. Investments 5 15,873.79 23,000.18 ii. Trade receivables 11 1,885.49 1,327.34 iii. Cash and cash equivalents 12 591.43 3,143.49 iv. Bank balances other than (iii) above 12 3,513.61 1,688.69 v. Loans 6 9.93 11.30 vi. Other financial assets 7 812.17 969.15 b. Other assets 10 544.24 238.25 Total Current Assets 23,230.66 30,378.40 Total Assets (1+2) 69,324.55 60,724.47 EQUITY AND LIABILITIES 1 Equity a. Equity Share capital 13 10,450.00 10,450.00 b. Other Equity 14 49,425.38 42,882.11 Equity attributable to owners of the Company 59,875.38 53,332.11 Non-controlling Interests 1,594.68 1,548.68 Total Equity 61,470.06 54,880.79 LIABILITIES 2 Non-current liabilities a. Financial Liabilities Other financial liabilities 15 75.93 60.74 b. Deferred tax liabilities (Net) 8 128.04 74.56 Total Non-current Liabilities 203.97 135.30 3 Current liabilities a. Financial Liabilities i. Trade payables 16 1,304.78 898.22 ii. Other financial liabilities 15 3,229.33 2,322.91 b. Provisions 17 883.19 757.69 c. Current tax liabilities (Net) 9 454.40 518.78 d. Other current liabilities 18 1,778.82 1,210.78 Total Current Liabilities 7,650.52 5,708.38 Total Equity and Liabilities (1+2+3) 69,324.55 60,724.47 Significant accounting policies 2 See accompanying notes forming part of the financial 1-38 statements In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
120 | Annual Report 2017-18 cONSOLIDATED Statement of Profit and Loss for the year ended march 31, 2018
(` in Lakhs) Particulars Note For the year ended For the year ended No. March 31, 2018 March 31, 2017 1 Revenue From Operations 19 19,102.44 14,600.13 2 Other Income 20 3,465.15 4,084.87 3 Total Income (1+2) 22,567.59 18,685.00 4 Expenses Employee benefits expense 21 3,033.51 2,486.87 Depreciation and amortisation expense 3&4 694.56 370.42 Impairment loss on financial assets 22.1 1.63 19.89 Administration and other expenses (including 22.2 4,696.11 4,151.36 contribution to IPF of ` 408.39 Lakhs in current year) (refer note no.37) Total expenses 8,425.81 7,028.54 5 Profit before tax (3 -4) 14,141.78 11,656.46 6 Tax expense: 23 Current tax 3,782.40 3,432.61 Prior period tax adjustment (1.94) (10.71) Deferred tax (2.51) (424.12) Total tax expense 3,777.95 2,997.78 7 Profit for the year (5-6) 10,363.83 8,658.68 Attributable to Owners of the Company 10,317.78 8,578.26 Non-controlling Interests 46.05 80.42 8 Other Comprehensive Income Items that will not be reclassified to profit or loss i. Remeasurement of the defined benefit plans; (1.91) (51.00) ii. Income tax relating to items that will not be 0.61 17.65 reclassified to profit or loss Total other comprehensive income for the year (1.30) (33.35) (net of tax) (i+ii) 9 Total Comprehensive Income for the year (7+8) 10,362.53 8,625.33 Attributable to Owners of the Company 10,316.53 8,545.10 Non-controlling Interests 46.00 80.23 10 Earnings per equity share (EPS) : Basic and Diluted EPS (`) 9.87 8.21 Face value of share (`) 10.00 10.00 Weighted average number of shares 104,500,000 104,500,000 Significant accounting policies 2 See accompanying notes forming part of the 1-38 financial statements In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
CDSL | 121 FINANCIAL STATEMENTS - CONSOLIDATED
CONSOLIDATED Statement of Changes in Equity for the year ended March 31, 2018
A. Equity Share Capital (` in Lakhs) Particulars Amount Balance as at April 1, 2016 10,450.00 Changes in equity share capital during the year - Balance as at March 31, 2017 10,450.00 Changes in equity share capital during the year - Balance as at March 31, 2018 10,450.00
B. Other Equity (` in Lakhs) Particulars Reserves and Surplus Equity Non Total General Retained attributable to Controlling Reserve Earnings shareholders Interest of the group Balance as at April 1, 2016 1,094.93 36,386.62 37,481.55 1,468.26 38,949.81 Profit for the year - 8,578.26 8,578.26 80.42 8,658.68 Other comprehensive income for - (33.35) (33.35) - (33.35) the year (net of tax) Payment of dividends (Including - (3,144.35) (3,144.35) - (3,144.35) dividend distribution tax) Balance at March 31, 2017 1,094.93 41,787.18 42,882.11 1,548.68 44,430.79 Profit for the year - 10,317.78 10,317.78 46.05 10,363.83 Other comprehensive income for - (1.30) (1.30) - (1.30) the period (net of tax) Payment of dividends (Including - (3,773.21) (3,773.21) - (3,773.21) dividend distribution tax) Balance at March 31, 2018 1,094.93 48,330.45 49,425.38 1,594.73 51,020.11
Significant accounting policies 2 See accompanying notes forming part of the financial statements 1-38
In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
122 | Annual Report 2017-18 CONSOLIDATED Cash Flow Statement for the year ended March 31, 2018
(` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 A. CASH FLOW FROM OPERATING ACTIVITIES Profit for the year 10,363.83 8,658.68 Adjustments for Income tax expenses recognised in profit or loss 3,777.95 2,997.78 Depreciation and Amortisation expense 694.56 370.42 Gain on sale / disposal of Property, plant and equipment and (11.47) (10.19) Intangible assets (Net) Provision for gratuity and compensated absences 11.70 89.19 Interest income recognised in profit or loss (1,131.59) (1,239.36) Dividend income recognised in profit or loss (386.24) (556.77) Net gain arising on financial assets measured at FVTPL (1,860.04) (2,201.22) Impairment loss on financial assets and bad debts written off 288.56 377.50 Acturial liability recognised (1.91) (51.00) Operating profit before working capital changes 11,745.35 8,435.03 Movements in working capital (Increase) / Decrease in trade receivables (846.71) (403.94) (Increase) / Decrease in loans and other assets (407.08) (61.56) (Increase) / Decrease in other financial assets (503.00) (389.31) Increase / (Decrease) in trade payables 406.56 166.42 Increase / (Decrease) in provisions 127.41 307.18 (Decrease) / Increase in other financial liabilities and other 1,310.28 (573.10) liabilities Cash generated from operations 11,832.81 7,480.72 Direct taxes paid (net of refunds) (3,902.95) (3,206.44) Net cash generated from operating activities 7,929.86 4,274.28 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment, intangible assets and (7,644.92) (518.34) capital advances Proceeds from sale of property, plant and equipment 32.10 (9.54) Net (Increase) / Decrease in investments 402.13 (2,341.85) Net Decrease / (Increase) in fixed deposits with banks (1,042.55) 2,818.00 Interest received 1,158.29 1,313.56 Dividend received 386.24 556.77 Net cash (used in) / generated from investing activities (6,708.71) 1,818.60
CDSL | 123 FINANCIAL STATEMENTS - CONSOLIDATED
CONSOLIDATED Cash Flow Statement for the year ended March 31, 2018
(` in Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 C. CASH FLOW FROM FINANCING ACTIVITIES Dividend and taxes paid thereon (3,773.21) (3,144.35) Net cash used in financing activities (3,773.21) (3,144.35) Net (Decrease) / Increase in cash and cash equivalents (A+B+C) (2,552.06) 2,948.53 Cash and cash equivalents at the beginning of the year 3,143.49 194.96 Cash and cash equivalents at the end of the year 591.43 3,143.40 Cash and cash equivalents at the end of the year comprises i) Cash on Hand 0.59 0.39 ii) Cheques in hand 43.93 - iii) Balances with Banks - In Current Accounts 546.91 3,143.10
Significant accounting policies 2 See accompanying notes forming part of the financial statements 1-38 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Indian Accounting Standard - 7 “Cash Flow Statement”.
In terms of our report attached For and on behalf of the Board of Directors For Deloitte Haskins & Sells T. S. Krishna Murthy P. S. Reddy Chartered Accountants Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 G. K. Subramaniam Amol Purandare Bharat Sheth Partner Company Secretary Chief Financial Officer M.No :109839 M No. A18078 Place : Mumbai Date : April 21, 2018
124 | Annual Report 2017-18 Significant accounting policies and Notes forming part of the CONSOLIDATED Financial Statements for the year ended March 31, 2018
1. Company Overview measured at fair values at the end of Central Depository Services (India) Limited each reporting period as required by (“CDSL”) herein after referred to as the “Parent the relevant Ind AS: Company” is a limited company incorporated (i) Financial assets and liabilities in India under the provisions of the Companies measured at fair value (refer Act, 1956. The registered office of the Parent accounting policy regarding Company is at 2501, A-Wing, Marathon Futurex, financial instruments). N. M. Joshi Marg, Lower Parel, Mumbai- 400013. CDSL was set up with the objective of providing (ii) Defined benefit and other long- convenient, dependable and secure depository term employee benefits. services at affordable cost to all market Historical cost is generally based on participants. A depository facilitates holding of the fair value of the consideration given securities in the electronic form and enables in exchange for goods and services. securities transactions to be processed by book entry by a Depository participant (DP) who acts 2.2. Basis of Consolidation as an agent of the depository, offers depository The consolidated financial statements services to investors. incorporate the financial statements of the Company and its subsidiaries (the Group). The equity shares of the Parent Company got Control is achieved when the Company: listed on the National Stock Exchange of India Limited on June 30, 2017. • has power over the investee; • is exposed, or has rights, to variable The consolidated financial statements were returns from its involvement with the authorised for issue by the Parent Company’s investee; and Board of Directors on April 21, 2018. • has the ability to use its power to affect 2. Significant Accounting Policies: its returns. 2.1. Basis of preparation and presentation The Company reassesses whether or a) Statement of compliance not it controls an investee if facts and The consolidated financial statements circumstances indicate that there are as at and for the year ended March 31, changes to one or more of the three elements 2018 have been prepared in accordance of control listed above. with Indian Accounting Standards When the Company has less than a (“Ind AS”) notified under section 133 majority of the voting rights of an investee, of the Companies Act 2013, read it has power over the investee when the together with the companies (Indian voting rights are sufficient to give it the Accounting Standards) Rules, 2015 practical ability to direct the relevant and Companies (Indian Accounting activities of the investee unilaterally. The Standards) Amendment Rules, 2016. Company considers all relevant facts and b) Basis of measurement circumstances in assessing whether or not the Company’s voting rights in an investee The consolidated financial statements are sufficient to give it power, including: have been prepared and presented under the historical cost convention, • the size of the Company’s holding of except for certain items that have been voting rights relative to the size and
CDSL | 125 FINANCIAL STATEMENTS - CONSOLIDATED
dispersion of holdings of the other vote profit and loss from the date the Company holders; gains control until the date when the Company ceases to control the subsidiary. • potential voting rights held by the Company, other vote holders or other Profit or loss and each component of other parties; comprehensive income are attributed to the • rights arising from other contractual owners of the Company and to the non- arrangements; and controlling interests. Total comprehensive income of subsidiaries is attributed to the • any additional facts and circumstances owners of the Company and to the non- that indicate that the Company has, controlling interests even if this results or does not have, the current ability in the non-controlling interests having a to direct the relevant activities at the deficit balance. time that decisions need to be made, including voting patterns at previous When necessary, adjustments are made shareholders’ meetings. to the financial statements of subsidiaries Consolidation of a subsidiary begins when to bring their accounting policies into line the Company obtains control over the with the Group’s accounting policies. subsidiary and ceases when the Company loses control of the subsidiary. Specifically, All intragroup assets and liabilities, equity, income and expenses of a subsidiary income, expenses, and cash flows relating to acquired or disposed of during the year are transactions between members of the Group included in the consolidated statement of are eliminated in full on consolidation. The subsidiary companies considered in the consolidated financial statements are:-
Name of Subsidiary Country of Principal Proportion Proportion Incorporation Activity of Ownership of Ownership Interest as on Interest as on March 31, 2018 March 31, 2017 CDSL Ventures Limited India KYC Registration 100.00 % 100.00 % CDSL Insurance India Holding 54.25 % 54.25% Repository Limited insurance - On its own name policies 51.00% 51.00% in electronic - Through CDSL 3.25% 3.25% mode Ventures Limited. CDSL Commodity India Commodity 100% 100% Repository Limited Repository (Incorporated on 7.3.2017)
a) Minority Interest in the net assets of b) Functional and presentation the consolidated subsidiaries consist currency of the amount of equity attributable The consolidated financial statements to the minority shareholders at the of the Group are presented in Indian date on which investments in the rupees, the national currency of India, subsidiary companies were made and which is the functional currency further movements in their share in of the Group and the currency of the equity, subsequent to the dates of the primary economic environment investments. Net profit / loss for the in which the Group operates. All year of the subsidiaries attributable financial information presented in to minority interest is identified and Indian rupees has been rounded to adjusted against the profit after tax the nearest Lakhs except share and of the Group in order to arrive at the per share data in terms of Schedule III income attributable to shareholders of unless otherwise stated. the Company.
126 | Annual Report 2017-18 c) Use of estimates and judgment (iii). Employee Benefits: Defined The preparation of consolidated employee benefit assets / financial statements in conformity liabilities determined based with Ind AS requires the management on the present value of future to make judgments, estimates and obligations using assumptions assumptions that affect the application determined by the Company of accounting policies and the reported with advice from an independent amounts of assets, liabilities, income, qualified actuary. expenses, disclosure of contingent (iv). Property plant and equipment assets and disclosure of contingent and Intangible assets: The charge liabilities. Actual results may differ in respect of periodic depreciation from these estimates. / amortisation is derived after determining an estimate of an Estimates and underlying assumptions asset’s expected useful life and are reviewed on a periodic basis. the expected residual value at Revisions to accounting estimates the end of its life. The useful are recognised in the period in which lives and residual values of the the estimates are revised and in any Group assets are determined by future periods affected. In particular, the management at the time the information about significant areas of asset is acquired and reviewed estimation, uncertainty and critical periodically, including at each judgments in applying accounting financial year end. The lives are policies that have the most significant based on historical experience effect on the amounts recognised in with similar assets as well as the financial statements is included in anticipation of future events, the following notes: which may impact their life, such as changes in technology. (i) Income taxes: The Company’s tax jurisdiction is in India. Significant (v). Impairment of trade receivables: judgments are involved in The Group estimates the determining the provision for probability of collection of income taxes, including the accounts receivable by analysing amount expected to be paid or historical payment patterns, recovered in connection with customer status, customer credit- uncertain tax positions. worthiness and current economic trends. If the financial condition (ii) minimum Alternate Tax (MAT) of a customer deteriorates, paid in accordance with the additional allowances may be tax laws, which gives future required. economic benefits in the form of 2.3 Summary of significant accounting adjustment to future income tax policies liability, is considered as an asset if there is convincing evidence i) Foreign currency transactions and that in the separate financial balances statements of the subsidiary In preparing the financial statements there will be normal income of each individual group entity, tax payable. Accordingly, MAT transactions in foreign currency are is recognised as a deferred tax translated into the respective functional asset in the Balance Sheet when currencies using the exchange rates it is highly probable that future prevailing at the dates of the respective economic benefit associated with transactions. Foreign exchange it will flow within permissible gains and losses resulting from the time limit under Income Tax Act, settlement of such transactions and 1961 to the extent MAT asset from the translation at the exchange recongnised. rates prevailing at reporting date
CDSL | 127 FINANCIAL STATEMENTS - CONSOLIDATED
of monetary assets and liabilities expire or it transfers the financial denominated in foreign currencies are asset and the transfer qualifies for recognised in the Statement of Profit derecognition under Ind AS 109. and Loss and reported within foreign A financial liability (or a part ofa exchange gains/ (losses). financial liability) is derecognised from the Company’s Balance Sheet when ii) Financial instruments the obligation specified in the contract Financial assets and financial liabilities is discharged or cancelled or expires. are recognised when the Group The classification of financial becomes a party to the contractual instruments depends on the objective provisions of the instruments. of the business model for which it is held. Management determines Financial assets and financial liabilities the classification of its financial are initially measured at fair value. instruments at initial recognition. Transaction costs that are directly attributable to the acquisition or Financial assets issue of financial assets and financial a) Financial assets (debt liabilities (other than financial assets instruments) at amortised cost and financial liabilities at fair value through profit or loss) are added to A financial asset shall be or deducted from the fair value of the measured at amortised cost if financial assets or financial liabilities, both of the following conditions as appropriate, on initial recognition. are met: Transaction costs directly attributable • the financial asset is held to the acquisition of financial assets within a business model or financial liabilities at fair value whose objective is to hold through profit or loss are recognised financial assets in order immediately in profit or loss. to collect contractual cash flows and Purchase or sales of financial assets that require delivery of assets within a • the contractual terms of time frame established by regulation or the financial asset gives convention in the market place (regular rise on specified dates to way trade) are recognised on trade cash flows that are solely date. While, loans and borrowings are payments of principal and recognised net of directly attributable interest on the principal transactions costs. amount outstanding (SPPI). For the purpose of subsequent measurement, financial instruments of They are presented as current the Group are classified in the following assets, except for those maturing categories: financial assets (debt later than 12 months after the instrument) comprising amortised reporting date which are presented cost, financial assets (debt instrument) as non-current assets. Financial comprising Fair Value Through Other assets are measured initially at fair Comprehensive Income (“FVTOCI”), value plus transaction costs and financial asset (equity instruments) subsequently carried at amortised at Fair value Through Profit and Loss cost using the effective interest account (“FVTPL”) and FVTOCI and method, less any impairment loss. financial liabilities at amortised cost or FVTPL. Amortised cost are represented by investment in interest bearing debt The Company derecognises a financial instruments, trade receivables, asset when the contractual rights to security deposits, cash and cash the cash flows from the financial asset equivalents, employee and other
128 | Annual Report 2017-18 advances and eligible current and profit and loss. Interest earned non-current assets. is recognised under the effective interest rate (EIR) model. Cash and cash equivalents comprise cash on hand and in Currently the Group has not banks and demand deposits with classified any interest bearing banks with original maturity less debt instruments under this than 3 months which can be category. withdrawn at any time without prior notice or penalty on the c) Equity instruments at FVTOCI principal. and FVTPL All equity instruments are For the purposes of the cash measured at fair value other flow statement, cash and cash than investments in subsidiaries. equivalents include cash on Equity instruments held for hand, in banks and demand trading is classified as FVTPL. For deposits with banks, net of all other equity instruments, the outstanding bank overdrafts that Group may make an irrevocable are repayable on demand, book election to present subsequent overdraft and are considered changes in the fair value in OCI. part of the Company’s cash The Group makes such election management system. on an instrument-by-instrument basis. b) Financial assets (debt instruments) at FVTOCI If the Group decides to classify an A debt instrument shall be equity instrument as at FVTOCI, measured at fair value through then all fair value changes on the other comprehensive income if instrument, excluding dividend both of the following conditions are recognised in OCI which is are met: not subsequently reclassified to profit or loss. • The objective of the business model is Currently the Group has not achieved by both collecting classified any equity instrument contractual cash flows and at FVTOCI. selling financial assets If the Group decides to classify an and equity instrument as at FVTPL, • The asset’s contractual then all fair value changes on cash flow represent SPPI. the instrument and dividend are recognised in Profit or Loss. Debt instruments included within FVTOCI category are d) Financial assets at FVTPL measured initially as well as FVTPL is a residual category for at each reporting period at fair financial assets. Any financial value plus transaction costs. Fair asset which does not meet the value movements are recognised criteria for categorisation as at in Other Comprehensive Income amortised cost or as FVTOCI, is (OCI). However, the Group classified as FVTPL. In addition the recognises interest income, Company may elect to designate impairment losses and reversals the financial asset, which and foreign exchange gain or loss otherwise meets amortised cost or in profit and loss. On derecognition FVTOCI criteria, as FVTPL if doing of the asset, cumulative gain or so eliminates or significantly loss previously recognised in reduces a measurement or OCI is reclassified from equity to recognition inconsistency.
CDSL | 129 FINANCIAL STATEMENTS - CONSOLIDATED
e) Earmarked Funds in accordance with Accounting Earmarked Funds represent Standards notified under the section bonus payable to Managing 133 of the Companies Act 2013, read Director of the Company, together with Rule 7 of the Companies held for specific purposes as (Accounts) Rules, 2014 and used the per the SEBI letter viz. MRD/ same as deemed cost in opening Ind DP/OW/31553/2013 dated AS Balance sheet prepared on 1st December 05, 2013. These April, 2016. amounts are invested in mutual fund units and the same are Derecognition of PPE: earmarked in the Balance Sheet. An item of property, plant and The Gain / (Loss) on changes in equipment is derecognised upon fair value of such investments are disposal or when no future economic shown as liabilities / assets and benefits are expected to arise from are not routed through the Profit the continued use of the asset. Any or Loss. gain or loss arising on the disposal or retirement of an item of property, plant Financial liabilities at amortised and equipment is determined as the cost difference between the sales proceeds Financial liabilities at amortised and the carrying amount of the asset cost represented by trade and other and is recognised in profit or loss. payables are initially recognised at fair value, and subsequently carried v) Intangible assets at amortised cost using the effective Intangible assets purchased are interest method. measured at cost as of the date of acquisition less accumulated Financial liabilities at FVTPL amortisation and accumulated Financial liabilities at FVTPL impairment, if any. represented by contingent consideration are measured at fair Amortisation has been provided on the value with all changes recognised in straight-line method as per the useful the profit or loss. life prescribed in Schedule II to the Companies Act, 2013 iii) Equity Instruments Ordinary shares: Ordinary shares are Intangible assets consists of computer classified as equity. Incremental costs software. directly attributable to the issuance of new ordinary shares are recognised as Amortisation methods, useful lifes and a deduction from equity, net of any tax residual values are reviewed at each effect (if any). reporting date, with the effect of any changes in estimate accounted for on iv) Property, Plant and Equipment (PPE) a prospective basis. Recognition and measurement: Property, plant and equipment are Derecognition of intangible assets: measured at cost less accumulated An intangible asset is derecognised depreciation and impairment losses, on disposal, or when no future if any. Cost includes expenditures economic benefits are expected from directly attributable to the acquisition use. Gains or losses arising from of the asset. derecognition of an intangible asset, measured as the difference between The Group had elected to consider the net disposal proceeds and the the carrying value of all its property, carrying amount of the asset, and are plant and equipment appearing in recognised in profit or loss when the the financial statements prepared asset is derecognised.
130 | Annual Report 2017-18 vi) Depreciation: Repairs and maintenance costs are Depreciation has been provided on the recognised in the Statement of Profit straight-line method as per the useful and Loss when incurred. The cost life prescribed in Schedule II to the and related accumulated depreciation Companies Act, 2013 except in respect are eliminated from the financial of the following categories of assets, statements upon sale or disposition in whose case the life of the assets of the asset and the resultant gains has been assessed as under based on or losses are recognised in the Profit technical advice, taking into account or Loss. the nature of the asset, the estimated usage of the asset, the operating Amounts paid towards the acquisition conditions of the asset, past history of of property, plant and equipment replacement, anticipated technological outstanding as of each reporting date changes, manufacturers warranties and the cost of property, plant and and maintenance support, etc.: equipment not ready for intended use before such date are disclosed Description of asset Useful life under capital work- in-progress. (in years) Depreciation is not recorded on capital Building (leasehold) 10 work-in-progress until construction Building (Freehold) 60 and installation are complete and the Civil and Interior work 10 asset is ready for its intended use. Computer Hardware/ 2 Software vii) Leases: Office Equipment 3-5 Leases under which the Parent Furniture and Fixtures 5 Company assumes substantially all the risks and rewards of ownership Vehicles 4 are classified as finance leases. All other leases are classified as operating Assets held under finance leases are leases. depreciated over their expected useful lives on the same basis as owned Finance Lease: assets. However, when there is no reasonable certainty that ownership When acquired, such assets are will be obtained by the end of the lease capitalised at fair value or present term, assets are depreciated over the value of the minimum lease payments shorter of the lease term and their at the inception of the lease, whichever useful lives. is lower. Corresponding liability to the lessor is included in the financial Depreciation methods, useful lifes and statements as finance lease obligation. residual values are reviewed at each Operating Lease: reporting date, with the effect of any Lease payments under operating changes in estimate accounted for on leases are recognised as an income a prospective basis. / expense on a straight line basis in the Statement of Profit and Loss over When parts of an item of property, plant the lease term except where the lease and equipment have different useful payments are structured to increase in lifes, they are accounted for as separate line with expected general inflation. items (major components) of property, plant and equipment. Subsequent viii) Impairment expenditure relating to property, plant a) Financial assets carried at and equipment is capitalised only when amortised cost and FVTOCI it is probable that future economic benefits associated with these will In accordance with Ind AS 109, flow to the Company and the cost of the Group applies Expected the item can be measured reliably. Credit Loss (ECL) model for
CDSL | 131 FINANCIAL STATEMENTS - CONSOLIDATED
measurement and recognition of (including prepayment, impairment loss. The Company extension etc.) over follows ‘simplified approach’ for the expected life of the recognition of impairment loss financial instrument. allowance on trade receivables. However, in rare cases when the expected life of The application of simplified the financial instrument approach does not require cannot be estimated the Group to track changes in reliably, then the entity credit risk. Rather, it recognises is required to use the impairment loss allowance remaining contractual based on lifetime ECLs at each term of the financial reporting date, right from its instrument. initial recognition. • Cash flows from the sale For recognition of impairment of collateral held or other loss on other financial assets credit enhancements and risk exposure, the Company that are integral to the determines that whether there contractual terms. has been a significant increase in the credit risk since initial The Group has used a practical recognition. If credit risk has expedient by computing the not increased significantly, expected credit loss allowance 12-month ECL is used to provide for trade receivable based on for impairment loss. However, a detailed analysis of trade if credit risk has increased receivable by individual significantly, lifetime ECL is used. departments. If in subsequent period, credit ECL impairment loss allowance quality of the instrument improves (or reversal) recognised during the such that there is no longer a period is recognised as income / significant increase in credit risk expense in the Statement of Profit since initial recognition, then and Loss. the entity reverts to recognising impairment loss allowance based Financial assets measured at on 12 month ECL. Lifetime ECLs amortised cost, contractual are the expected credit losses revenue receivable: ECL is resulting from all possible default presented as an allowance, events over the expected life i.e. as an integral part of the of a financial instrument. The measurement of those assets in 12 month ECL is a portion of the balance sheet. The allowance the lifetime ECL which results reduces the net carrying amount. from default events that are Until the asset meets write off possible within 12 months after criteria, the Group does not the reporting date. ECL is the reduce impairment allowance difference between all contractual from the gross carrying amount. cash flows that are due to the Group in accordance with the b) Non-financial assets contract and all the cash flows The Company assesses at each that the entity expects to receive reporting date whether there is (i.e. all shortfalls), discounted at any observable evidence that a the original EIR. When estimating non-financial asset or a group of the cash flows, an entity is non-financial assets is impaired. required to consider: If any such indication exists, • All contractual terms of the Company estimates the the financial instrument amount of impairment loss. An impairment loss is calculated as
132 | Annual Report 2017-18 the difference between an asset’s period when the employee provides carrying amount and recoverable service. Under a defined benefit plan, it amount. Losses are recognised is the Company’s obligation to provide in profit or loss and reflected in agreed benefits to the employees. The an allowance account. When the related actuarial and investment risks Company considers that there are fall on the Company. The present no realistic prospects of recovery value of the defined benefit obligations of the asset, the relevant amounts is calculated using the projected unit are written off. If the amount of credit method. impairment loss subsequently a) Short term employee benefits: decreases and the decrease can Performance linked bonus is be related objectively to an event provided as and when the same occurring after the impairment is approved by the management. loss was recognised, then the previously recognised impairment b) Post-employment benefits and loss is reversed through profit or Other long term employee benefits loss. are treated as follows: The recoverable amount of an i) Defined Contribution asset or cash-generating unit (as Plans: defined below) is the greater of Provident Fund: The its value in use and its fair value Provident fund plan is less costs to sell. In assessing operated by Regional value in use, the estimated future Provident Fund cash flows are discounted to Commissioner (RPFC) and their present value using a pre- the contribution thereof tax discount rate that reflects are paid / provided for. current market assessments of the time value of money and the Contributions to the risks specific to the asset. For the defined contribution plans purpose of impairment testing, are charged to profit or assets are grouped together into loss for the respective the smallest group of assets financial year as and when that generates cash inflows from services are rendered by continuing use that are largely the employees. independent of the cash inflows ii) Defined Benefits Plans: of other assets or groups of assets • Gratuity: Gratuity for (the “cash-generating unit”). employees is covered by Gratuity Scheme ix) Employee benefits with Life Insurance The Group participates in various Corporation of employee benefit plans. Post- India and the employment benefits are classified contribution thereof as either defined contribution plans is paid / provided for. or defined benefit plans. Under Provision for gratuity a defined contribution plan, the is made on the basis Company’s only obligation is to pay of actuarial valuation a fixed amount with no obligation to on Projected Unit pay further contributions if the fund Credit Method as at does not hold sufficient assets to pay the end of the period. all employee benefits. The related actuarial and investment risks fall • Compensated absences: on the employee. The expenditure Accumulated for defined contribution plans is compensated recognised as expense during the absences, which are
CDSL | 133 FINANCIAL STATEMENTS - CONSOLIDATED
expected to be availed as an asset, if it is virtually certain or encashed within that reimbursement will be received 12 months from the and the amount of the receivable can end of the year are be measured reliably. treated as short term employee benefits. Provisions for onerous contracts The obligation towards are recognised when the expected the same is measured benefits to be derived by the Company at the expected cost from a contract are lower than the of accumulating unavoidable costs of meeting the compensated future obligations under the contract. absences as the Provisions for onerous contracts are additional amount measured at the present value of lower expected to be paid of the expected net cost of fulfilling as a result of the the contract and the expected cost of unused entitlement terminating the contract. as at the year end. Accumulated If the effect of the time value of money compensated is material, provisions are discounted absences, which are using a current pre-tax rate that expected to be availed reflects, when appropriate, the risks or encashed beyond specific to the liability. 12 months from the end of the year are Provisions are reviewed at each treated as non-current balance sheet date adjusted to reflect employee benefits. the current best estimates. Contingent The Company’s liabilities are not recognised in the liability is actuarially financial statements. Contingent determined (using the Assets are not recognised but disclosed Projected Unit Credit in the Financial Statements when method) at the end of economic inflow is probable. each year. xi. Revenue x. Provisions In contracts involving the rendering of services, revenue is measured using Provisions are recognised when the the proportionate completion method Group has a present obligation (legal and are recognised net of applicable or constructive) as a result of a past taxes provided that at the time of event, it is probable that an outflow performance it is not unreasonable of economic benefits will be required to expect ultimate collection. If at to settle the obligation and a reliable the time of raising of any claim it is estimate can be made of the amount of unreasonable to expect ultimate the obligation. collection, revenue recognition is The amount recognised as a provision postponed till the time the ultimate is the best estimate of the consideration collection is made. required to settle the present Interest is recognised on a time proportionate obligation at the end of the reporting basis taking into account the amount period, taking into account the risks outstanding and the rate applicable. and uncertainties surrounding the obligation. xii. Investment income Investment income consists of interest When some or all of the economic income on funds invested, dividend benefits required to settle a provision income and gains on the disposal are expected to be recovered from a of FVTPL financial assets. Interest third party, the receivable is recognised income is recognised as it accrues in
134 | Annual Report 2017-18 the Statement of Profit and Loss, using Deferred income tax asset are the effective interest method. recognised to the extent that it is probable that taxable profit will Dividend income is recognised in the be available against which the Profit or Loss on the date that the deductible temporary differences, Company’s right to receive payment is and the carry forward of unused established. tax credits and unused tax losses can be utilised. Deferred income xiii. Income tax tax liabilities are recognised for Income tax comprises current and all taxable temporary differences. deferred tax. Income tax expense is recognised in profit or loss except to The carrying amount of deferred the extent it relates to items directly income tax assets is reviewed at recognised in equity or in other each reporting date and reduced comprehensive income. to the extent that it is no longer probable that sufficient taxable a) Current income tax profit will be available to allow all or part of the deferred income Current income tax for the tax asset to be utilised. Deferred current and prior periods are income tax assets and liabilities measured at the amount expected are measured at the tax rates to be recovered from or paid to that are expected to apply in the the taxation authorities based on period when the asset is realised the taxable income for the period. or the liability is settled, based on The tax rates and tax laws used to tax rates (and tax laws) that have compute the current tax amount been enacted or substantively are those that are enacted at the enacted at the reporting date. reporting date and applicable for the period. The Company offsets Deferred tax assets include current tax assets and current tax Minimum Alternate Tax (MAT) liabilities, where it has a legally paid in accordance with the tax enforceable right to set off the laws in India, which is likely to recognised amounts and where it give future economic benefits intends either to settle on a net in the form of availability of set basis or to realise the asset and off against future income tax liability simultaneously. liability. Accordingly, MAT is recognised as deferred tax asset b) Deferred income tax in the balance sheet when the Deferred income tax is recognised asset can be measured reliably using the balance sheet approach. and it is probable that the future Deferred income tax assets and economic benefit associated with liabilities are recognised for the asset will be realised. deductible and taxable temporary differences arising between the The Group recognises interest levied tax base of assets and liabilities and penalties related to income tax and their carrying amount in assessments in income tax expenses. financial statements, except when the deferred income tax xiv. Earnings per share arises from the initial recognition The Group reports basic and diluted of goodwill or an asset or liability earnings per share in accordance with in a transaction that is not a Ind AS 33 on Earnings per share. business combination and affects Basic earnings per share is computed neither accounting nor taxable using the weighted average number of profits or loss at the time of the equity shares outstanding during the transaction. period.
CDSL | 135 FINANCIAL STATEMENTS - CONSOLIDATED
Diluted EPS is computed by dividing 3. the Company does not have the net profit after tax by the weighted an unconditional right to defer average number of equity shares settlement of the liability for at considered for deriving basic EPS least twelve months after the and also weighted average number of balance sheet date. equity shares that could have been 4. All other liabilities are classified issued upon conversion of all dilutive as non-current potential equity shares. Dilutive potential equity shares are deemed xvi. Operating Cycle converted as of the beginning of the Based on the nature of products / period, unless issued at a later date. activities of the Group and the normal Dilutive potential equity shares are time between acquisition of assets determined independently for each and their realisation in cash or cash period presented. The number of equivalents, the Group has determined equity shares and potentially dilutive its operating cycle as 12 months for equity shares are adjusted for bonus the purpose of classification of its shares, as appropriate. assets and liabilities as current and non-current. xv. Current / Non-current classification The Group present assets and 2.4 New standards and interpretations not liabilities in the balance sheet based yet adopted on current/non-current classification a) Ind AS 115 Revenue from Contracts with Customers: Assets: An asset is classified as Ind AS 115, Revenue from Contracts current when it satisfies any of the with Customers was initially notified following criteria: under the Companies (Indian 1. it is expected to be realised in, or is Accounting Standards) Rules, 2015. intended for sale or consumption in, the entity’s normal operating The standard applies to contracts with cycle; customers. The core principle of the new standard is that an entity should 2. it is held primarily for the purpose recognise revenue to depict transfer of being traded; of promised goods or services to 3. it is expected to be realised within customers in an amount that reflects twelve months after the balance the consideration to which the entity sheet date; or expects to be entitled in exchange for those goods or services. Further, 4. it is cash or a cash equivalent the new standard requires enhanced unless it is restricted from being disclosures about the nature, timing exchanged or used to settle a and uncertainty of revenues and liability for atleast twelve months cash flows arising from the entity’s after the balance sheet date contracts with customers. The new 5. All other assets are classified as standard offers a range of transition non-current. options. An entity can choose to apply the new standard to its historical Liabilities: A liability is classified as transactions - and retrospectively current when it satisfies any of the adjust each comparative period. following criteria: Alternatively, an entity can recognise 1. it is expected to be settled in, the the cumulative effect of applying the entity’s normal operating cycle; new standard at the date of initial 2. it is held primarily for the purpose application and make no adjustments of being traded; it is due to be to its comparative information. The settled within twelve months after chosen transition option can have a the balance sheet date; or significant effect on revenue trends in
136 | Annual Report 2017-18 the financial statements. A change in of cash-settled awards, modification the timing of revenue recognition may of cash-settled awards and awards require a corresponding change in the that include a net settlement feature timing of recognition of related costs. in respect of withholding taxes. It clarifies that the fair value of cash- However, it may be noted that Ind settled awards is determined on AS 115, stands withdrawn under a basis consistent with that used Companies (Indian Accounting for equity-settled awards. Market- Standards) (Amendments) Rules, 2016 based performance conditions and vide MCA notification dated March non-vesting conditions are reflected 30, 2016. Accordingly, disclosure with in the ‘fair values’, but non-market respect to the impact of Ind AS 115 for performance conditions and service the financial year ending March 31, vesting conditions are reflected in 2017 has not been disclosed. the estimate of the number of awards expected to vest. Also, the amendment b) Amendment to Ind AS 7: clarifies that if the terms and conditions The amendment to Ind AS 7 requires of a cash-settled share-based payment the entities to provide disclosures that transaction are modified with the enable users of financial statements to result that it becomes an equity-settled evaluate changes in liabilities arising share-based payment transaction, the from financing activities, including transaction is accounted for as such both changes arising from cash flows from the date of the modification. and non-cash changes, suggesting Further, the amendment requires the inclusion of a reconciliation between award that include a net settlement the opening and closing balances in feature in respect of withholding taxes the balance sheet for liabilities arising to be treated as equity-settled in its from financing activities, to meet the entirety. The cash payment to the tax disclosure requirement. authority is treated as if it was part of The Group is evaluating the an equity settlement. requirements of the amendment and the effect on the financial statements The Group does not have share based is being evaluated. payments hence there will be no impact on the financial statements. c) Amendment to Ind AS 102: The amendment to Ind AS 102 provides specific guidance to measurement
CDSL | 137 FINANCIAL STATEMENTS - CONSOLIDATED Total 24.73 27.60 21.83 45.36 538.31 586.07 452.76 578.48 284.03 276.11 538.31 465.33 1,099.65 7,463.79 1,003.64 8,563.44 1,003.64 7,605.16 ( ` in Lakhs) 3.05 3.05 28.75 34.84 56.14 27.39 21.55 21.73 28.93 25.87 60.54 28.75 92.84 Motor 101.81 130.56 130.56 101.81 153.38 vehicles 3.69 1.20 0.13 0.02 6.55 8.96 32.86 27.82 40.75 16.19 41.82 16.69 56.99 32.86 41.82 Office 235.76 214.04 271.03 equipments - and 0.08 0.08 10.77 53.64 59.97 72.07 26.38 71.99 27.34 15.57 53.64 71.99 18.35 262.78 102.84 216.36 319.20 fixtures Furniture - - - - 47.29 40.55 38.75 44.48 28.40 83.23 18.89 50.93 87.84 46.32 47.29 83.23 35.94 134.16 Computers - - 7.22 20.19 275.61 287.50 311.00 195.94 141.43 506.94 134.18 454.33 555.89 385.19 275.61 506.94 231.33 941.08 Plant and equipments ------50.08 50.08 50.08 18.85 68.93 100.16 169.09 169.09 150.24 100.16 169.09 169.09 Building- Leasehold ------0.01 0.01 0.01 0.01 0.01 0.01 Freehold Building------Work 10.35 10.35 250.22 239.87 250.22 Interior Civil and ------Office 74.96 74.96 Freehold 6,250.31 6,325.27 6,325.27 Refer to note 31 for disclosure of contractual commitments the acquisition property, plant and equipment. The Campany’s obligations under finance lease (see note 25) are secured by the lessor’s title to leased assets. Depreciation for the year Deductions / Adjustments Deductions / adjustments Additions during the year ended M arch 31, 2017 Balance as at April 1, 2016 As at March 31, 2018 Deductions / Adjustments Balance as at April 1, 2017 As at March 31, 2017 Balance as at April 1, 2017 Depreciation for the year ended M arch 31, 2017 Additions during the year Balance as at April 1, 2016 Deductions /adjustments Particulars Balance as at March 31, 2018 Gross carrying value Net carrying value Balance as at March 31, 2017 Balance as at March 31, 2017 Accumulated depriciation and impairment Balance as at March 31, 2018 Note: 1 Contractual commitments: 2 3. Property, plant and equipment
138 | Annual Report 2017-18 4. Intangible assets (` in Lakhs) Particulars Computer Total Softwares Gross carrying value Balance as at April 1, 2016 207.80 207.80 Additions during the year ended March 31, 2017 78.56 78.56 Deductions / adjustments - - Balance as at March 31, 2017 286.36 286.36 Balance as at April 1, 2017 286.36 286.36 Additions during the year 196.74 196.74 Deductions / adjustments - - Balance as at March 31, 2018 483.10 483.10 Accumulated amortisation and impairment Balance as at April 1, 2016 142.87 142.87 Amortisation for the year ended March 31, 2017 86.39 86.39 Deductions / Adjustments - - Balance as at March 31, 2017 229.26 229.26 Balance as at April 1, 2017 229.26 229.26 Amortisation for the year 108.49 108.49 Deductions / Adjustments - - Balance as at March 31, 2018 337.75 337.75 Net carrying value As at March 31, 2018 145.35 145.35 As at March 31, 2017 57.10 57.10
Note: Contractual commitments: Refer to Note 31 for disclosure of contractual commitments for the acquisition of Intangible assets.
CDSL | 139 FINANCIAL STATEMENTS - CONSOLIDATED
5. Other investments (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current investments Un-quoted investments (all fully paid) Investments in equity instruments measured at FVTPL - Belapur Railway Station Commercial Company Limited 0.50 0.50 (BRSCCL) (Fully paid equity shares of ` 10 each) - National E-Governance Services Limited (NESL) 300.00 300.00 (Fully paid equity shares of ` 10 each) Aggregate value of un-quoted Investments 300.50 300.50 Total investment in equity instruments at FVTPL 300.50 300.50 Quoted Investments Investments in tax free bonds measured at amortised cost Owned - Tax free bonds 10,341.07 10,355.99 10,341.07 10,355.99 Investments in mutual funds measured at FVTPL Owned - Units of growth oriented debt schemes of mutual funds 25,210.40 16,592.42 Earmarked Units of growth oriented debt schemes of mutual funds 22.84 40.86 25,233.24 16,633.28 Total Non-current investments 35,874.81 27,289.77
Aggregate amount of quoted investments 35,574.31 26,989.27 Market value of quoted investments 300.50 300.50 Aggregate amount of unquoted investments - - Current investments Quoted investments Investments in mutual funds measured at FVTPL Owned - Investments in mutual funds - ETFs - 275.54 - 275.54 Unquoted investments Investments in mutual funds measured at FVTPL Owned - Investments in other mutual funds 14,106.80 9,803.84 14,106.80 9,803.84 Current portion of long term investments Quoted investments Investments in mutual funds measured at FVTPL Owned - Units of growth oriented debt schemes of mutual funds 1,746.10 12,903.34 Earmarked - Units of growth oriented debt schemes of mutual funds 20.89 17.46 1,766.99 12,920.80 Total current investments 15,873.79 23,000.18
Aggregate amount of quoted investments 1,766.99 13,196.34 Aggregate amount of unquoted investments 14,106.80 9,803.84 Aggregate amount of impairment in value of investments - -
140 | Annual Report 2017-18 5A Investments Type Name of the Body Corporate No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Details of Non current investments Invesment in others a) Investments in equity shares Unquoted Belapur Railway Station 5,000 5,000 0.50 0.50 Commercial Company Limited (BRSCCL) (Fully paid up) Unquoted National E-Governance Services 3,000,000 3,000,000 300.00 300.00 Limited (NESL) (Fully paid up) 300.50 300.50 b) Investment in tax free bonds Quoted 7.21% REC Tax Free bonds 50 50 500.03 500.07 211122 Quoted 7.22% PFC Tax Free Bond Series 50 50 500.03 500.03 95 291122 Quoted 7.18% IRFCL Tax Free Bonds 130,000 130,000 1,304.38 1,305.08 190223 Quoted 7.19% IRFC Tax Free Bond 310725 50 50 500.46 500.53 Quoted 8.01% NHB Tax Free Bonds 70 70 700.19 700.22 300823 Quoted 7.17% NHB Tax Free Bonds 50 50 502.12 502.49 010123 Quoted 8.35% NHAI Tax Free Bonds 70 70 700.14 700.16 221123 Quoted 8.20% NHAI Tax Free Bonds 72,500 72,500 742.70 746.59 250122 Quoted 8.18% NHPC Tax Free Bonds 22,547 22,547 225.47 225.47 021123 Quoted 8.19% NTPC Tax Free Bonds 50 50 500.03 500.04 040324 Quoted 8.41% NTPC Tax Free Bonds 31,665 31,665 316.65 316.65 161223 Quoted 8.20% PFC Tax Free Bonds 010222 100,000 100,000 1,029.56 1,036.66 Quoted 7.15% NTPC Tax Free Bond 50 50 500.26 500.29 210825 Quoted 7.17% RECL Tax Free Bond 50 50 500.36 500.39 230725 Quoted 8.18% RECL Tax Free Bonds 50 50 518.08 520.66 111023 Quoted HAI 7.11% Tax Free Bonds 30 30 300.02 300.03 18.09.2025 Quoted PFC 7.16% Tax Free Bonds 50 50 500.26 500.29 17.07.2025 Quoted REC 7.17% Tax Free Bonds 50 50 500.33 500.37 23.07.2025 10,341.07 10,355.99 c) Investment in Units of Mutual funds Quoted ABSL Fixed Term Plan- Series OM 5,000,000.00 - 533.43 - - Direct - Growth Quoted ABSL Fixed Term Plan- Series OD - 9,260,869.00 9,260,869.00 994.76 931.52 Direct - Growth Quoted ABSL Fixed Term Plan- Series OH - 7,180,656.00 7,180,656.00 773.30 724.32 Direct - Growth
CDSL | 141 FINANCIAL STATEMENTS - CONSOLIDATED
Type Name of the Body Corporate No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted ABSL Fixed Term Plan- Series OI - 1,171.48 1,096.64 Direct - Growth 10,901,955.00 10,901,955.00 Quoted ABSL Fixed Term Plan- Series OK - 1,071.24 1,002.99 Direct - Growth 10,000,000.00 10,000,000.00 Quoted ABSL Fixed Term Plan- Series OY - 3,000,000.00 - 305.43 - Direct - Growth Quoted DHFL Pramerica Fixed Maturity - 6,500,000.00 - 838.89 Plan Series 63 - Direct - Growth Quoted DSP Blackrock FMP Sr 204 - 37M - 1,072.81 1,006.84 Direct - Growth 10,000,000.00 10,000,000.00 Quoted DSP Blackrock FMP Sr 205 - 37M - 1,072.30 1,005.75 Direct - Growth 10,000,000.00 10,000,000.00 Quoted DSP Blackrock FMP Sr 209 - 37M - 4,300,000.00 4,300,000.00 459.17 430.49 Direct - Growth Quoted DSP Blackrock FMP Sr 219 - 40M - 3,000,000.00 - 304.48 - Direct - Growth Quoted HDFC FMP 1150D Mar 2018 (1) Sr 7,043,577.00 - 711.57 - 39 Direct Growth Quoted HDFC MF FMP1158D Feb2018 (1) 6,000,000.00 607.67 - Sr39-Direct-Growth Quoted HSBC Fixed Term Series 131 - 3,000,000.00 301.05 Direct -Growth Quoted ICICI Prudentail FMP Sr 80- 4,493,054.00 4,493,054.00 483.62 452.94 Plan J - 1253 Days Direct Cum 29.07.2020 Quoted ICICI Prudentail FMP Sr 80- 6,000,000.00 6,000,000.00 645.61 604.85 Plan L - 1245 Days Direct Cum 05.08.2020 Quoted ICICI Prudentail FMP Sr 80- 3,000,000.00 3,000,000.00 322.46 302.02 Plan O - 1233 Days Direct Cum 29.07.2020 Quoted ICICI Prudentail FMP Sr 80- 6,500,000.00 6,500,000.00 695.19 651.00 Plan T - 1225 Days Direct Cum 04.08.2020 Quoted ICICI Prudentail FMP Sr 81 - - 1,034.76 - Plan Q - 1163 Days Direct Cum 10,000,000.00 05.10.2020 Quoted ICICI Prudentail FMP Sr 82 - 5,000,000.00 - 509.04 - Plan A - 1236 Days Direct Cum 26.04.2021 Quoted IDFC FTP Sr 129 - Direct- Growth 1,076.53 1,008.21 1147Days 24.04.2020 10,000,000.00 10,000,000.00 Quoted IDFC FTP Sr 131 - Direct- Growth 1,339.78 1,253.21 1139Days 12.05.2020 12,512,212.00 12,512,212.00 Quoted Invesco India FMP Sr 29 -Plan B - 1,071.20 1,003.06 Direct -Growth 14.05.2020 10,000,000.00 10,000,000.00 Quoted Invesco India FMP Sr 30 -Plan A - 5,000,000.00 - 509.23 - Direct -Growth 27.04.2021 Quoted Invesco India FMP Sr 30 Plan C - 6,000,000.00 609.22 Direct-Growth 27.04.2021 Quoted Reliance Fixed Horizon Fund - - 165,632.40 19.48 XXVIII - SR 19-Direct-Growth Quoted Reliance Fixed Horizon Fund - - 508.82 - XXXV - SR 11-Direct-Growth 50,000,000.00 10.05.2021
142 | Annual Report 2017-18 Type Name of the Body Corporate No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted Reliance Fixed Horizon Fund - - 407.31 - XXXV - SR 12-Direct-Growth 40,000,000.00 10.05.2021 Quoted Sundaram FTP HM - 1100 Days- 198,759.00 198,759.00 22.84 21.38 Direct-Growth Quoted ABSL Fixed Term Plan Series OD - 5,000,000 5,000,000 537.08 502.94 Direct - Gr Quoted ABSL Fixed Term Plan Series OE - 8,000,000 8,000,000 858.95 804.46 Direct - Gr Quoted ABSL Fixed Term Plan Series OI - 9,995,095 9,995,095 1,074.03 1,005.42 Direct - Gr Quoted ABSL Fixed Term Plan Series OK - 5,500,000 5,500,000 589.18 551.64 Direct - Gr Quoted ABSL Fixed Term Plan Series OT - 4,715,264 - 487.89 - Direct - Gr Quoted Kotak Fixed Term Plan Series 202 - 10,000,000 10,000,000 1,069.49 1,002.14 Direct - Gr Quoted Kotak Fixed Term Plan Series 212 - 3,500,000 - 355.89 - Direct - Gr Quoted Reliance FHF XXIV Sr 15-Direct - - 3,000,000 - 413.09 Growth Quoted Reliance FHF XXXIII-SR 10 Direct 5,204,160 - 553.58 - Growth Quoted DSP BR FMP Sr 210-36M - Direct 532.13 - Growth 5,000,000.000 Quoted Reliance FHF - XXXV-Sr 14-Direct - 560.72 - -Growth 5,520,267.322 25,233.24 16,633.28 Total of Non current investments (a+b+c) 36,585.26 28,344.42 Details of Current portion of Long term investments Invesment in Others d) Investment in Units of Mutual funds Quoted ABSL Interval Income Fund - 8,266,208.66 - 1,144.83 Annual Plan 5 - Gr.-Direct Quoted DHFL Pramerica Fixed Maturity - 138,027.00 - 17.46 Plan Series 70 (2 Years)- Direct Plan - Growth Quoted DHFL Pramerica Fixed Maturity 6,500,000.00 - 899.95 - Plan Series 63 - Direct Plan - Growth Quoted DSP BlackRock FMP S161-12M- - 6,549,900.00 - 835.69 Dir-G Mat Dt 20.04.15 Quoted HDFC FMP 370D Apr 2014 (2) - 4,079,690.00 - 520.54 Direct Plan- GR Quoted HDFC FMP 370D Mar2014 (1) - 4,384,836.00 - 568.71 Direct Plan- GR Quoted HDFC FMP 371D Feb 2014(2) Sr 6,000,000.00 - 778.52 29 - Direct Plan- GR Quoted HDFC FMP 377Days March2014 - 1,853.13 (1) - Direct Plan- GR 14,468,207.00 Quoted ICICI Prudential Fixed Maturity 3,284,400.00 - 424.42 Plan-Series 73-366 days Plan A - Direct Plan-Cum
CDSL | 143 FINANCIAL STATEMENTS - CONSOLIDATED
Type Name of the Body Corporate No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Quoted ICICI Prudential Fixed Maturity - 1,572.73 Plan-Series 73-369 days Plan P - 12,303,571.00 Direct Plan-Cum Quoted ICICI Prudential Fixed Maturity 4,793,668.00 - 613.54 Plan-Series 73-369 days Plan S - Direct Plan-Cum Quoted ICICI Prudential Fixed Maturity 5,565,133.00 - 712.06 Plan-Series 74-369 days Plan I - Direct Plan-Cum Quoted ICICI Prudential Fixed Maturity 4,000,000.00 - 503.12 Plan-Series 74-370 days Plan V - Direct Plan-Cum Quoted Reliance Fixed Horizon Fund - 165,632.40 - 20.89 - XXVIII - SR 19-Direct-Growth Quoted Reliance Fixed Horizon Fund - XXV 5,000,000.00 - 649.64 - Series 24 - Direct Plan Growth Plan Quoted Reliance Fixed Horizon Fund - XXV 4,840,140.49 - 627.39 - Series 26 - Direct Plan Growth Plan Quoted Reliance Fixed Horizon Fund 4,000,000.00 - 402.97 - XXXVI Series 7 - Direct - Growth Quoted Reliance Yearly Interval Fund - 4,496,856.79 - 624.47 Series 5 - Direct Plan Growth Plan Quoted Reliance Yearly Interval Fund-Sr-5- - 3,257,927 - 452.42 Direct Plan - Growth Quoted Reliance Fixed Horizon Fund XXV - 4,000,000 - 518.49 Sr 26 - Direct Plan - Growth Quoted Reliance Fixed Horizon Fund XXVI - 4,000,000 - 503.64 Sr 31 - Direct Plan - Growth Quoted Reliance FHF XXIV Sr 15-Direct - 3,000,000 - 443.18 - Growth Total of Current portion of Long 1,766.99 12,920.80 term investments Details of Current Investments e) Investment in Units of Mutual funds Unquoted Axis Liquid Fund - Direct Plan - 57,955.06 - 580.10 - DDR Unquoted DSP BlackRock Ultra Short Fund- 8,913,320.59 - 897.65 Direct-DDR Unquoted HDFC Liquid Fund - Direct-DDR 0.01 - - - Unquoted Invesco India Ultra Short Term 20,625.18 - 210.16 Fund - Direct-DDR Unquoted Invesco India Active Income Fund- 24,820.44 505.05 Direct-Growth Unquoted LIC MF Savings Plus - Direct - 626,023.03 - 63.27 - DDR Unquoted Reliance Money Manager Direct - 139,141.92 - 1,401.85 -DDR Unquoted Reliance Short Term Fund - Direct 8,318,202.89 8,012,167.62 941.63 899.85 - MDR Unquoted Reliance Floating Rate Fund_Short 3,885,879.04 3,885,879.04 1,092.20 1,021.70 Term Plan Direct Gr Unquoted Sundaram Select Debt Asset Plan 1,766.41 1,683.79 -Direct-MDR 13,809,283.24 13,257,495.82
144 | Annual Report 2017-18 Type Name of the Body Corporate No. of Shares / Units (` In Lakhs) As at March As at March As at March As at March 31, 2018 31, 2017 31, 2018 31, 2017 Unquoted ABSL Savings Fund-Direct-DDR 715,138 38,863 716.49 38.98 Unquoted Kotak Floater Short Term- Direct 32,413 21,873 327.90 221.28 - DDR Unquoted Kotak Treasury Advantage Fund- 443,053 - 125.08 - Direct - Growth Unquoted Reliance Short Term Plan - Direct 4,190,096 - 474.32 - -MDR Unquoted Reliance Floating Rate Fund Direct 6,790,120 4,601,997 1,908.50 1,209.98 Growth Unquoted DSP BlackRock Liquidity Fund 36,837.492 88,697.919 368.72 887.73 Direct - DDR Unquoted ICICI Prudential Banking and PSU 851.05 796.82 Debt Fund- Direct -Growth 4,209,447.844 4,209,447.844 Unquoted Reliance Banking & PSU Debt - - 534.05 Fund -Direct- MDR 5,192,299.161 Unquoted Axis Liquid Fund - Direct- DDR 23,962.98 - 239.86 - Unquoted Axis Banking & PSU Debt Fund- 64,005.94 - 1,036.17 - Direct-Growth Unquoted HDFC Floating Rate Income Fund- 5,123,351.93 - 1,556.59 - Short Term Plan-Direct-Growth Unquoted Reliance Money Manager Fund- 63,700.55 - 1,553.46 - Direct- Growth 14,106.80 9,803.84 f) Investment in Units of Mutual funds- Exchange Traded Fund Quoted Sensex Prudential ICICI ETF - 90,000.00 - 275.54 (SPICE) - 275.54 Total of Current Investments 14,106.80 10,079.38 (e+f) Total Investment 51,748.60 50,289.95
6. Loans (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current Unsecured, considered good Loans to staff 9.98 8.17 Total 9.98 8.17 Current Unsecured, considered good Loans to staff 9.93 11.30 Total 9.93 11.30 Note: These financial assets are carried at amortised cost.
CDSL | 145 FINANCIAL STATEMENTS - CONSOLIDATED
7. Other financial assets (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current (a) Sundry deposits Deposits with Related Party - BSE Limited - 72.77 Others 62.04 - (b) Bank balance in deposit accounts 741.64 880.00 (with remaining maturity of more than 12 months, Earmarked ` 23.85 Lakhs) Total 803.68 952.77 Current (a) Sundry deposits - 15.19 (b) Deposits with Related Party - BSE Limited 72.77 - (c) Accrued interest Owned - On bank deposits 136.63 163.36 - On bonds 355.31 355.28 (d) Receivable from selling shareholders 247.16 430.33 (e) Others 0.30 4.99 Total 812.17 969.15
8. Deferred tax balances (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Deferred tax assets (net) Deferred tax assets 669.26 903.02 Deferred tax liabilities 347.37 674.33 Deferred tax assets (net) 321.89 228.69 Deferred tax liabilities (net) Deferred tax liabilities 227.81 137.45 Deferred tax assets 99.77 62.89 Deferred tax liabilities (net) 128.04 74.56
146 | Annual Report 2017-18 1.30 1.51 1.30 0.13 (9.19) 77.46 45.67 62.25 61.05 388.66 154.78 131.04 547.24 Closing 744.05 194.00 550.05 312.50 271.16 769.34 221.42 124.79 614.03 189.20 337.42 at March 31, 2018 2,383.96 2,696.46 balance as ( ` in Lakhs) ( ` in Lakhs) ( ` in Lakhs) - - 1.30 1.30 1.30 Income in Other As at March 31, 2017 As at March 31, 2017 Recognised - - - Comprehensive 62.25 61.05 265.04 285.64 221.42 124.23 593.52 141.74 308.40 1.30 1,533.21 2018 1,798.25 (3.45) (0.09) 11.89 36.56 38.57 (54.64) (192.77) (242.19) (202.41) (240.98) March 31, Profit or loss Recognised in for year ended
- - As at March 31, 2018 As at March 31, 2018 as at 1.60 2017 40.90 392.11 142.89 185.68 183.58 789.43 Closing balance 945.16 154.13 791.03 March 31, ------(2.54) (2.54) (2.54) (2.54) Income in Other Recognised Comprehensive
- - 6.37 0.54 99.31 45.46 35.00 (16.00) 170.14 445.32 (275.72) (275.18) Profit or loss Recognised in for year ended March 31, 2017
as at 2.54 5.90 1.06 2.54 2017 97.43 292.80 179.31 199.58 April 1, balance 777.56 Opening (291.19) 1,065.15 1,068.75 (Investments in bonds) Deferred tax assets Provision for compensated absences, gratuity and other employee benefits Provision for incentive scheme DPs Allowance for doubtful debts (expected credit loss allowance) On difference between book balance and tax of PPE On defined benefit obligation Total Deferred tax liabilities On changes in fair value of investments Impact on account of amortised cost accounting of financial assets On defined benefit obligation Total liabilities Net asset / (liabilities) Total Particulars Particulars Tax losses (revenue in nature) Tax losses (capital in nature) Particulars A.Y. 2017-18 - Capital in Nature A.Y. 2018-19 - Capital in Nature A.Y. 2019-20 - Capital in Nature A.Y. 2020-21 - Capital in Nature A.Y. 2021-22 - Capital in Nature A.Y. 2022-23 - Capital in Nature A.Y. 2022-23 - Revenue in Nature A.Y. 2023-24 - Capital in Nature A.Y. 2023-24 - Revenue in Nature A.Y. 2024-25 - Capital in Nature A.Y. 2024-25 - Revenue in Nature 1.
m AT credit 2.
Note: The unrecognised tax credits will expire in following years: Deferred tax assets / (liabilities) in relation to: Note: Unused tax losses (capital in nature) for which no deferred assets have been recognised are attributable to the follo wing:
CDSL | 147 FINANCIAL STATEMENTS - CONSOLIDATED
9. Income tax asset and liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non-current tax assets Advance income tax 1,370.69 1,312.58 (net of provisions of ` 11,247.40 Lakhs, March 31, 2017 ` 8,312.59 Lakhs) TOTAL 1,370.69 1,312.58 Current tax liabilities Income tax payable 454.40 518.78 (net of advance tax of ` 9,400.00 Lakhs, March 31, 2017 ` 9,281.19 Lakhs) TOTAL 454.40 518.78
10. Other assets (` in Lakh) Particulars As at As at March 31, 2018 March 31, 2017 Non Current Capital advances - 3.11 Prepaid Expenses 103.70 3.05 TOTAL 103.70 6.16 Current Prepaid expenses 230.12 111.86 CENVAT / GST credit receivable 309.10 118.01 Advances to creditors 5.02 8.38 TOTAL 544.24 238.25
11. Trade receivables (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 - Secured, considered good - - - Unsecured, considered good 1,885.49 1,327.34 - Unsecured, considered doubtful 456.76 541.65 Less: Allowance for doubtful debts (expected credit loss allowance) (456.76) (541.65) TOTAL 1,885.49 1,327.34 1. Trade receivables are dues in respect of services rendered in the normal course of business. 2. The average credit period on sale of services is 25 days. No interest is charged on trade receivables for the first 25 days from the date of invoice. 3. The Group has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a detailed analysis of trade receivables by individual departments. 4. There are no dues by directors or other officers of the Group or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member.
148 | Annual Report 2017-18 Movement in the expected credit loss allowance (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of the year 541.65 521.76 Movement in expected credit loss allowance on trade receivables (84.89) 19.89 calculated at lifetime expected credit losses (refer note no. 22.1) Balance at end of the year 456.76 541.65
12. Cash and cash equivalents and other bank balances For the purpose of statement of cashflows, cash and cash equivalents includes cash on hand, in banks and cheques in hand. Cash and cash equivalents at the end of the reporting period as shown in the statement of cashflow can be reconciled to the related items on the balance sheet as follows: (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Current (a) Cash on hand 0.59 0.39 (b) Cheques, drafts on hand 43.93 - Balance with Banks Owned fund - In current accounts 546.91 3,143.10 Cash and cash equivalents as per balance sheet 591.43 3,143.49 Cash and cash equivalents as per statement of cash flows 591.43 3,143.49 Bank Balances other than above Balances with Banks Owned fund - In deposit accounts (refer note 12.1 below) 2,867.91 1,687.00 Earmarked fund - In current account (refer note 12.2 below) 584.59 - - In current accounts 61.11 1.69 Total 3,513.61 1,688.69 Notes: 12.1. Deposits includes FDRs of ` 901.26 Lakhs as lien maked against bank guarantees 12.2. Earmarked against payable on expenses towords IPO.
CDSL | 149 FINANCIAL STATEMENTS - CONSOLIDATED
13. Equity Share capital Particulars As at As at As at As at March 31, 2018 March 31, 2018 March 31, 2017 March 31, 2017 Number (` in Lakhs) Number (` in Lakhs) Equity Share capital Authorised share capital: Equity Shares of ` 10/- each 150,000,000 15,000.00 150,000,000 15,000.00 with voting rights Issued share capital: Equity Shares of ` 10/- each 104,500,000 10,450.00 104,500,000 10,450.00 with voting rights Subscribed and Paid-up share capital Equity Shares of ` 10/- each 104,500,000 10,450.00 104,500,000 10,450.00 with voting rights Total 104,500,000 10,450.00 104,500,000 10,450.00
Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting year Particulars Opening Balance Fresh issue Closing Balance Equity shares with voting rights As at March 31, 2017 - Number of shares 104,500,000 - 104,500,000 - Amount (`) In Lakhs 10,450.00 - 10,450.00 As at March 31, 2018 - Number of shares 104,500,000 - 104,500,000 - Amount (`) In Lakhs 10,450.00 - 10,450.00
Details of shares held by each shareholder holding more than 5% shares: Class of shares / Name of As at As at shareholder March 31, 2018 March 31, 2017 Number of % holding in Number of % holding in shares held that class of shares held that class of shares shares Equity shares with voting rights BSE Limited (Entity having 25,080,000 24.00 52,297,850 50.05 significant influence) HDFC Bank Limited 7,500,000 7.18 7,500,000 7.18 Standard Chartered Bank 7,500,000 7.18 7,500,000 7.18 Canara Bank 6,744,600 6.45 6,744,600 6.45 Bank of India 5,820,000 5.57 5,820,000 5.57 State Bank of India 5,225,000 5.00 10,000,000 9.57 Bank of Baroda - - 5,300,000 5.07 The Group has one class of equity shares having a par value of ` 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
150 | Annual Report 2017-18 14. Other equity (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 General reserve 1,094.93 1,094.93 Retained earnings 48,330.45 41,787.18 Total 49,425.38 42,882.11
14.1 General reserve (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of year 1,094.93 1,094.93 Movement during the year - - Balance at end of year 1,094.93 1,094.93 The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to Profit or Loss.
14.2 Retained earnings (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Balance at beginning of year 41,787.18 36,386.62 Profit attributable to owners of the Company 10,317.78 8,578.26 Other comprehensive income / (loss) arising from remeasurement (1.30) (33.35) of defined benefit obligation (net of income tax) Payment of dividends (including tax on dividend) (3,773.21) (3,144.35) Balance at end of year 48,330.45 41,787.18 The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the separate financial statements of the Company and also considering the requirements of Companies Act, 2013. Thus, the amount reported above are not distributable in entirety. On May 29, 2017, a dividend of ` 3.00 per share (total dividend including dividend distribution tax of ` 3,773.21 Lakhs) was paid to the holders of equity shares. On June 01, 2016, the dividend paid was ` 2.50 per share (total dividend including dividend distribution tax of ` 3,144.35 Lakhs). The Board of Directors of the Parent Company, at its meeting on April 21, 2018, have proposed a final dividend of ` 3.50/- per equity share of face value ` 10/- per share for the financial year ended March 31, 2018. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held and if approved would result in a cash outflow of approximately ` 4,402.17 Lakhs, including dividend distribution tax.
CDSL | 151 FINANCIAL STATEMENTS - CONSOLIDATED
15. Other financial liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Non Current Accrued employee benefits expense* 75.93 60.74 TOTAL 75.93 60.74 Current Security deposits 2,254.97 2,281.50 Payable for purchase of Property, plant and equipment 181.71 2.34 Payable to selling shareholders 693.30 - Others 99.35 39.07 TOTAL 3,229.33 2,322.91 * Investments have been earmarked against certain portion of this liability
16. Trade Payables (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 a. Total outstanding dues of micro enterprises and small - - enterprises (refer note no. 34.2) b. Total outstanding dues of creditors other than micro enterprises and small enterprises - Payable to BSE - 5.31 - Accrued employee benefits expense 902.58 733.96 - Other trade payables 402.20 158.95 Total (a+b) 1,304.78 898.22
17. Provisions (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 (a) Provision for employee benefits Compensated absences (refer note no. 35.2) 286.16 256.86 Provision for gratuity (net) 65.52 87.94 (b) Other provisions Provision for Incentive Scheme for DP (refer note no. 38) 531.51 412.89 Total (a+b) 883.19 757.69
18. Other current liabilities (` in Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Current Income received in advance 161.31 69.47 Advances from customers 795.93 766.08 Statutory remittances 413.19 84.23 Contribution to Investor Protection Fund 408.39 291.00 Total 1,778.82 1,210.78
152 | Annual Report 2017-18 19. Revenue from operations (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 (a) Sale of services (Refer Note (i) below) 18,768.82 14,552.00 (b) Other operating revenues (Refer Note (ii) below) 333.62 48.13 Total 19,102.44 14,600.13 Notes (i) Sale of services comprise : Annual Issuer charges 5,562.42 5,171.44 Transaction charges 4,402.59 3,124.66 Users Facility charges 341.14 376.73 Settlement charges 162.71 166.22 Account Maintenance charges 287.66 267.60 E-Voting charges 409.47 417.70 ECAS charges 642.99 747.19 IPO/Corporate Action charges 2,948.67 1,651.53 Others 349.98 190.51 On Line Data charges 2,918.39 1,872.98 Documents Storage charges 527.59 543.51 New Policy (EIA) charges - Created by CDSL Insurance 2.35 1.27 Repository Ltd. New Policy (EIA) charges - Created by Insurer 1.33 0.38 Existing Policy charges 5.24 0.72 Annual Maintenance charges-Insurance Company 7.77 7.69 Health Insurance Policies 0.19 - E-KYC/C-KYC 198.33 11.87 Total - Sale of services 18,768.82 14,552.00 (ii) Other operating revenues comprise : Interest from debtors 35.78 30.97 Advances written back 169.55 - Bad debts recovered/Written back 128.29 17.16 Total - Other operating revenues 333.62 48.13
20. Other income (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 a) Interest income earned on financial assets that are measured at amortised cost Bank deposits 360.01 467.58 Investments in debt instruments 769.92 770.38 Interest on staff loan 1.66 1.40 b) Dividend from investments in mutual funds (measured at FVTPL) Dividend income from others 386.24 556.77 c) Other gains or losses: Net gain arising on financial assets measured at FVTPL 1,860.04 2,201.22 Gain on sale / disposal of property, plant and equipments and 11.47 10.19 intangible assets (Net) d) Other non-operating income Miscellaneous income 75.81 77.33 Total 3,465.15 4,084.87
CDSL | 153 FINANCIAL STATEMENTS - CONSOLIDATED
21. Employee benefits expense (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Salaries, allowances and bonus 2,783.37 2,282.73 Contribution to provident and other funds 144.51 111.34 Staff welfare expenses 105.63 92.80 Total 3,033.51 2,486.87
22.1 Impairment loss on financial assets (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Impairment loss allowance on trade receivable 1.63 19.89 Total 1.63 19.89
22.2 Administration and other expenses (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Annual SEBI fees 161.75 155.97 Bad debts written off 286.93 357.61 Contribution to investor protection fund (refer note no.37) 408.39 459.75 Business promotion expenses 70.39 51.51 Incentive scheme for DPs (refer note no.38) 307.03 288.12 Directors' sitting fees 80.30 51.50 Auditors' remuneration Audit fees 18.07 17.00 Tax audit fees 1.50 1.50 Reimbursement of expenses 0.72 1.03 Insurance 60.32 76.96 Legal, professional and consultancy fees 197.13 133.44 Postage, telephone and communication charges 633.39 491.52 Power and fuel 64.97 64.26 Printing and stationery 24.58 24.38 Rates and taxes 55.75 26.87 Rent 259.76 321.87 Repairs to buildings 152.48 131.86 Inter KRA Expenses 64.12 - Computer technology related expenses 970.26 842.36 Travelling and conveyance 137.19 125.51 Water charges 4.05 2.96 Point of Service (POS) charges 248.06 228.59 Contribution to Corporate social responsibility (refer note no.22.2.1) 158.22 118.97 ASA/KSA - AUA/KUA Expenses 124.93 - Expenses for GST Suvidha Provider 2.06 - Expenses for NAD 59.21 22.83 Preliminary Expenses (CCRL) - 48.83 Miscellaneous expenses 144.55 106.16 Total 4,696.11 4,151.36
154 | Annual Report 2017-18 22.2.1 CSR Expenditure (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 a) The gross amount required to be spent by the Company during 206.00 157.00 the year b) Amount debited to Consolidted Statement of Profit or Loss were paid in cash during the respective year and were incurred for the purpose other than construction / acquisition of any asset.
23. Taxes 23.1. Income tax expense The major components of income tax expense for the year ended March 31, 2018 and 2017 are as under:
23.1.1 Profit or loss section (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Current tax expense 3,782.40 3,432.61 Provision for tax for prior year write back (1.94) (10.71) Deferred tax (2.51) (424.12) Total income tax expense recognised in Profit or Loss 3,777.95 2,997.78
23.1.2 Other comprehensive section (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 Remeasurement of the defined benefit plans 0.61 17.65 Total income tax expense recognised in other 0.61 17.65 comprehensive income
23.2 The income tax expense for the year can be reconciled to the accounting profit as follows: (` in Lakhs) Particulars For the For the year ended year ended 31/03/2018 31/03/2017 (A) Profit before tax 14,141.78 11,656.46 (B) Enacted tax rate in India 34.608% 34.608% (C) Expected tax expenses 4,894.19 4,034.07 (D) Other than temporary differences Effect of fair value of investments (884.23) (760.14) Effect of Income that is exempt from taxation (386.72) (445.30) Expenses disallowed / (allowed) 135.16 184.63 Income setoff with brought forward losses/DTA not 19.55 (15.48) recognised Total adjustments (1,116.24) (1,036.29) (E) Tax expenses after adjustments (C+D) 3,777.95 2,997.78 (F) Tax expenses recognised in Profit or Loss 3,777.95 2,997.78
CDSL | 155 FINANCIAL STATEMENTS - CONSOLIDATED
24. Earnings per share (EPS) Reconciliation of number of equity shares used in the computation of basic and diluted earnings per share is set out below: Particulars For the year ended March 31, 2018 March 31, 2017 Weighted average number of equity shares (issued share capital) 10,45,00,000 10,45,00,000 outstanding during the year for the calculation of basic EPS Effect of dilutive equity shares outstanding during the year - - Weighted average number of equity shares (issued share capital) 10,45,00,000 10,45,00,000 outstanding during the year for the calculation of dilutive EPS Face Value per Share (`) 10/- Each 10/- Each Profit for the year `( in Lakhs) 10,317.78 8,578.26 Basic and Diluted EPS (` per share) 9.87 8.21
25. Leases 25.1 Obligations under finance lease The Company has building situated at Belapur, Maharashtra which is classified as finance lease. The Company has made an upfront payment and there are no lease obligations to be paid in future periods. Therefore, disclosures with respect to Minimum lease payments and Present value of Minimum lease payments have not been given. 25.2 Operating lease arrangements Lease payments recognised in the profit or loss for the year is` 149.23 Lakhs (year ended March 31, 2017 ` 259.81 Lakhs). The agreements are executed for a period ranging from 12 to 60 months with renewable clause and also provide for termination at will by either party giving a prior notice period between 1 to 3 months.
26. Financial instruments The carrying value and fair value of financial instruments by categories: (` in Lakhs) Particulars Carrying Value Fair Value March 31, March 31, March 31, March 31, 2018 2017 2018 2017 i) Financial assets a) Amortised Cost Investment in debt instruments 10,341.07 10,355.99 10,341.07 10,355.99 Trade receivables 1,885.49 1,327.34 1,885.49 1,327.34 Cash and cash equivalents 591.43 3,143.49 591.43 3,143.49 Bank balances other than cash and cash 3,513.61 1,688.69 3,513.61 1,688.69 equivalents Loans 19.91 19.47 19.91 19.47 Other financial assets 1,615.85 1,921.92 1,615.85 1,921.92 Total 17,967.36 18,456.90 17,967.36 18,456.90 b) FVTPL Investment in equity instruments 300.50 300.50 300.50 300.50 Investment in mutual funds 41,107.03 39,633.46 41,107.03 39,633.46 Total 41,407.53 39,933.96 41,407.53 39,933.96 ii) Financial liabilities a) Amortised Cost Trade payables 1,304.78 898.22 1,304.78 898.22 Other financial liabilities 3,305.26 2,383.65 3,305.26 2,383.65 Total 4,610.04 3,281.87 4,610.04 3,281.87
156 | Annual Report 2017-18 Fair value hierarchy Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). Fair value of the Group’s financial assets that are measured at fair value on a recurring basis:: (` in Lakhs)
Financial assets Fair value as at Fair value Valuation technique(s) hierarchy and key input(s) March 31, March 31, 2018 2017 Investments in equity instruments 300.50 300.50 Level 3 Discounted cash flow Investments in mutual funds 41,107.03 39,357.92 Level 2 NAV declared by respective mutual funds Investments in exchange traded - 275.54 Level 2 NAV declared by funds respective mutual funds
There were no transfers between Level 1 and 2 during the years.
The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
(a) The fair value of the quoted bonds and mutual fund are based on price quotations at reporting date. The fair value of unquoted instruments and other financial liabilities, as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(b) The fair values of the unquoted equity shares have been estimated using a discounted cash flow model. The valuation requires the management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility, the probabilities of the various estimates within the range can be reasonably assessed and are used in the management’s estimate of fair value for these unquoted equity investments.
27. Financial risk management The Group’s principal financial liabilities, comprise trade and other payables. The main purpose of these financial liabilities is to support its operations. The Group’s principal financial assets include trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk, market risk (including foreign currency and interest rate risk) and regulatory risk. The Group’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Group’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.
CDSL | 157 FINANCIAL STATEMENTS - CONSOLIDATED
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Group assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
• Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The demographics of the customer, including the default risk of the industry in which the customer operates, also has an influence on credit risk assessment.
None of the customers accounted for more than 10% of the receivables for the years ended March 31, 2018 and March 31, 2017 and revenue for the years ended March 31, 2018 and March 31, 2017.
• Investments The Group limits its exposure to credit risk by making investment as per the investment policy. Further investment committee of the Group review the investment portfolio on monthly basis and recommend or provide suggestion to the management. The Group does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The Group manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
The Group’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. The management monitors the Group’s net liquidity position through forecasts on the basis of expected cash flows.
The table below provides details regarding the contractual maturities of significant financial liabilities as at March 31, 2018 and March 31, 2017 (` in Lakhs) Particulars As at March 31, 2018 March 31, 2017 Trade payables < 1 year 1,304.78 898.22 1-5 years - - > 5 years - - Other financial liabilities < 1 year 3,229.33 2,322.91 1-5 years 75.93 60.74 > 5 years - - Total 4,610.04 3,281.87
158 | Annual Report 2017-18 The table below provides details regarding the contractual maturities of significant financial assets as at March 31, 2018 and March 31, 2017. (` in Lakhs) Particulars As at March 31, 2018 March 31, 2017 Investments < 1 year 15,873.79 23,000.18 1 - 5 years 29,812.06 18,416.50 > 5 years 6,062.75 8,873.27 Total 51,748.60 50,289.95 Loans < 1 year 9.93 11.30 1 - 5 years 9.98 8.17 > 5 years - - Total 19.91 19.47 Other financial assets < 1 year 812.17 969.15 1 - 5 years 803.68 952.77 > 5 years - - Total 1,615.85 1,921.92 Trade receivables < 1 year 1,885.59 1,327.34 1 - 5 years - - > 5 years - - Total 1,885.59 1,327.34 Cash and cash equivalents < 1 year 591.43 3,143.49 1 - 5 years - - > 5 years - - Total 591.53 3,143.49 Bank balances other than cash and cash equivalents < 1 year 3,513.61 1,688.23 1 - 5 years - - > 5 years - - Total 3,513.61 1,688.23
The Group manages contractual financial liabilities and contractual financial assets on net basis.
Market risk The Group’s business, financial condition and results of operations are highly dependent upon the levels of activity in the capital markets and in particular upon the trading volume on stock exchanges, the number of listed securities, the number of new listings and subsequent issuances and introduction of new services which will ease in doing business in capital markets. Our securities depository business competes closely with our competitor for DPs, investor accounts and number of instruments on our systems. We rely heavily on technological equipment and IT at our facilities. Interruptions in the availability of IT systems could adversely impact our business. Shift in consumer preferences away from investing in securities market to other financial products, may dampen prospects of our business.
CDSL | 159 FINANCIAL STATEMENTS - CONSOLIDATED
• Foreign Currency risk The Group’s foreign currency risk arises in respect of foreign currency transactions. The Company’s foreign currency expenses is insignificant, while a significant portion of its costs are in Indian rupees. As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Group’s expenses measured in rupees may decrease. Due to lessor quantum of expenses from foreign currencies, the Group is not much exposed to foreign currency risk.
• Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term / short- term investment with floating interest rates. Interest rate risk primarily arises from floating rate investment. The Group’s investments in floating rate are primarily in FMPs of mutual funds, which do not expose it to significant interest rate risk. There is also a reinvestment risk in the current scenario, as the rates are going downwards.
Regulatory risk The Group requires various regulatory approvals, registrations and permissions to operate its business, including at a corporate level as well as at the level of each of it’s components. Some of these approvals are required to be renewed from time to time. The Group’s operations are subject to continued review by regulator and these regulations may change from time to time in fast changing capital market environment. The Group’s compliance team constantly monitors the compliance with these rules and regulations.
28. Capital management The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the returnon capital as well as the level of dividends on its equity shares. The Company’s objective when managing capital is to maintain an optimal structure so as to maximise shareholder value. The Company is predominantly equity financed which is evident from the capital structure. Further, the company has always been a net cash company with cash and bank balances along with investment which is predominantly investment in liquid and short term mutual funds being far in excess of financial liabilities.
29. Information on related party transactions as required by Ind AS 24 – ‘Related party disclosures’ for the year ended 31st March, 2018. Description of relationship Name of the related party Entity having significant influence (from 30.06.2017) BSE Limited (Parent Company up to 29.06.2017) Subsidiaries of the entity having significant influence Marketplace Technologies Private Limited (from 30.06.2017) Indian Clearing Corporation Limited (Fellow Subsidiaries up to 29.06.2017)
160 | Annual Report 2017-18 Description of relationship Name of the related party Key Management Personnel (KMP) Shri P. S. Reddy - MD & CEO Shri T S Krishna Murthy Shri R. M. Malla (appointed w.e.f. July 30, 2016) Shri B. Prasada Rao (appointed w.e.f. October 21, 2016) Smt Jayshree Vyas (ceased to be director w.e.f. January 17, 2017) A. Krishna Kumar (appointed w.e.f. July 30, 2016) Usha Narayanan (appointed w.e.f. April 24, 2017) Shri C. Venkat Nageswar (appointed w.e.f. June 28, 2016) Smt Nehal Vora Shri Nayan Mehta Shri K.V. Subramanian
Details of related party transactions (` In Lakhs) Particulars For the year For the year ended March ended March 31, 2018 31, 2017 BSE Limited Rendering of services 384.80 180.92 Receiving of services 243.19 250.55 License agreements-Rent and Maintenance 173.63 298.56 Dividend Paid 1,568.94 1,415.87 Balances outstanding at the end of the year Trade receivables 24.66 41.90 Loans and advances-Deposits given 72.77 72.77 Trade payables - 5.31 Marketplace Technologies Private Limited Rendering of services 0.11 0.17 Receiving of services 19.23 16.87 Balances outstanding at the end of the year Trade payables - 2.56 Indian Clearing Corporation Limited Rendering of services 6.61 6.00 Receiving of services 0.07 - Balances outstanding at the end of the year Trade receivables 0.06 0.04 KMP The remuneration of directors and other members of key management personnel during the year is as follows: • Shri P. S. Reddy 144.54 114.35
CDSL | 161 FINANCIAL STATEMENTS - CONSOLIDATED
30. Contingent liabilities (` In Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Claims against the Company not acknowledged as debt in respect of : a) Service tax matters 3,978.81 3,984.72 (refer note (refer note (i),(ii), (i),(ii),(iii) and (iv)) (iii) and (iv)) b) Income tax matters 4.92 4.92 (refer note (v)) (refer note (v)) (i) The Group is a party in certain legal proceedings filed by beneficial owners/third parties in the normal course of business. The Group does not expect the outcome of these proceedings to have any material adverse effect on its financial conditions, results of operations and cash flow. The amount isnot ascertainable. (ii) The Commissioner of Service Tax, Mumbai has issued Order on 19th August 2016 to CDSL demanding service tax amount of ` 2,112.18 Lakhs and Penalty of `1,866.63 Lakhs. (iii) The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 23rd April 2012 to Parent Company demanding service tax amount of ` 5.91 Lakhs on the charges recovered by Parent Company for wrong availment of Cenvat Credit on Group Mediclaim policy in respect of staff for FY 2007-08 to FY 2011-12. Order has been issued on 20th December, 2017 by Commissioner (Appeals)-I CGST& CX, Mumbai, allowing CENVAT credit of ` 5.91 Lakhs in companies favour. (iv) Claims against the Parent Company not acknowledged as debt : Service Tax The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 21st October 2009 to CDSL demanding service tax amount of ` 1,791 Lakhs on the charges recovered by Parent Company for providing “Depository services” to DPs and RTAs for the period 2004-05 to 2008-09. The Commissioner of Service Tax, Mumbai has issued Show cause cum Demand Notice (SCN) on 4th October 2010 to Parent Company demanding service tax amount of ` 465 Lakhs on the charges recovered by Parent Company for providing “Depository services” to DPs and RTAs for the period 2009-10. (v) Claims against the Parent Company not acknowledged as debt : Income Tax Appeal pending with Commissioner of Income Tax (Appeals) for the AY 2011-12 amounting to ` 4.92 Lakhs. 31. Commitments (` In Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 (a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 18.33 116.59 Intangible assets 355.00 34.34 (b) Other commitments 41.16 253.33
32. Segment information The Managing Director (MD) and CEO of the Parent Company, has been identified as the chief operating decision maker (CODM) as defined by Indian Accounting Standard 108 “Operating Segments”. The CODM evaluates the Group’s performance, allocates resources based on analysis of the various performance indicators of the Group as a single unit.
162 | Annual Report 2017-18 The Group operates in three operating Segments namely Depository Services, Data Processing Services and Others. These are the reportable business segment as per Indian Accounting Standard 108 “Operating Segments”. The reportable business segments are in line with the segment wise information which is being presented to the CODM. (` In Lakhs) Sr. Particulars For the Year For the Year No Ended March Ended March 31, 2018 31, 2017 I Segment Revenue (a) Depository Activity 17,887.12 15,522.41 (b) Data Processing Services 4,282.36 2,968.40 (c) Others 514.60 271.64 Total 22,684.08 18,762.45 Less : Inter Segment Revenue 116.49 77.45 Total Income 22,567.59 18,685.00 II Segment Results (a) Depository Activity 10,638.14 9,183.65 (b) Data Processing Services 3,273.12 2,349.00 (c) Others 230.52 123.81 Total 14,141.78 11,656.46 Profit before taxation 14,141.78 11,656.46 Less : Provision for taxation 3,777.95 2,997.78 Profit after taxation 10,363.83 8,658.68 As at As at March 31, 2018 March 31, 2017 III Segment assets (a) Depository Activity 46,650.34 43,908.02 (b) Data Processing Services 11,834.08 9,309.53 (c) Others 8,524.62 6,517.74 (d) Unallocated 2,315.21 989.18 Total 69,324.55 60,724.47 IV Segment liabilities (a) Depository Activity 6,117.87 5,113.35 (b) Data Processing Services 437.46 125.66 (c) Others 120.15 88.54 (d) Unallocated 1,179.01 516.13 Total 7,854.49 5,843.68 Particulars For the year For the year ended ended March 31, 2018 March 31, 2017 Property, plant and equipment and intangible assets Acquired during the year (a) Depository Activity 7,663.82 478.24 (b) Data Entry and Storage 32.42 23.08 (c) Others 105.66 30.00 (d) Unallocated - Total Segment property, plant and equipment and intangible 7,801.90 531.32 assets acquired Depreciation and amortisation (a) Depository Activity 646.42 349.27 (b) Data Entry and Storage 14.09 7.17 (c) Others 34.05 13.98 (d) Unallocated Total Depreciation and amortisation 694.56 370.42 Unallocated Depreciation and amortisation - - Total Depreciation and amortisation 694.56 370.42
CDSL | 163 FINANCIAL STATEMENTS - CONSOLIDATED
33.1. Information about services: Refer note 1. 33.2. Information about geographical areas: There is no revenue from external customers and non- current assets outside India. 33.3. Information about customers: No single external customer amounts to 10% or more of Company’s revenue.
34. Additional information to the financial statements 34.1 Expenditure in foreign currency: (` In Lakhs) Particulars As at As at March 31, 2018 March 31, 2017 Travelling Expenses 21.15 25.15 Others 8.18 81.80
34.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 Particulars As at As at March 31, 2018 March 31, 2017 (a) Principal amount and interest thereon remaining unpaid - - at the end of year Interest paid including payment made beyond appointed day (b) Interest due and payable for delay during the year - - (c) Amount of interest accrued and unpaid as at year end - - (d) The amount of further interest due and payable even in - - the succeeding year
34.3 Additional information as required by Paragraph 2 of the General Instructions for Preparation of Consolidated Financial Statements to Schedule III to the Companies Act, 2013 (` In Lakhs) Name of the entity in the March 31, 2018 March 31, 2017 Net assets, i.e., total assets minus total liabilities As % of Amount As % of Amount consolidated consolidated net assets net assets Parent Company- Central Depository 68% 41,594.53 72% 39,517.26 Services (India) Limited CDSL Ventures Limited 18% 11,345.01 16% 8,924.89 CDSL Insurance Repository Limited 3% 1,913.95 3% 1,859.46 CDSL Commodity Repository Limited 8% 5,021.89 6% 3,030.50 Non-controlling Interest in subsidiary 3% 1,594.68 3% 1,548.68 Total 100% 61,470.06 100% 54,880.79
164 | Annual Report 2017-18 (` In Lakhs) Name of the entity in the For the year ended March For the year ended March 31, 2018 31, 2017 Share in profit or loss As % of Amount As % of Amount consolidated consolidated net assets net assets Parent Company- Central Depository 74% 7,653.63 78% 6,709.60 Services (India) Limited CDSL Ventures Limited 24% 2,494.01 21% 1,801.60 CDSL Insurance Repository Limited 1% 78.57 1% 118.79 CDSL Commodity Repository Limited 1% 91.62 -1% (51.73) Non-controlling Interest in subsidiary - 46.00 1% 80.42 Total 100% 10,363.83 100% 8,658.68
(` In Lakhs) Name of the entity in the For the year ended March For the year ended March 31, 2018 31, 2017 Share in Other Comprehensive Income As % of Amount As % of Amount consolidated consolidated net Other net Other Comprehensive Comprehensive Income Income Parent Company- Central Depository 35% (0.45) 94% (31.34) Services (India) Limited CDSL Ventures Limited 62% (0.80) 6% (2.05) CDSL Insurance Repository Limited 3% (0.05) 0% 0.04 CDSL Commodity Repository Limited - - - - Non-controlling Interest in subsidiary - - - - Total 100% (1.30) 100% (33.35)
(` In Lakhs) Name of the entity in the For the year ended March For the year ended March 31, 2018 31, 2017 Share in Total Comprehensive Income As % of Amount As % of Amount consolidated consolidated net Other net Other Comprehensive Comprehensive Income Income Parent Company- Central Depository 74% 7,653.18 78% 6,678.25 Services (India) Limited CDSL Ventures Limited 24% 2,493.21 21% 1,799.55 CDSL Insurance Repository Limited 1% 78.52 1% 118.83 CDSL Commodity Repository Limited 1% 91.62 -1% (51.73) Non-controlling Interest in subsidiary 1% 46.00 1% 80.42 Total 100% 10,362.53 100% 8,625.33
CDSL | 165 FINANCIAL STATEMENTS - CONSOLIDATED
35. Employee benefits 35.1 Defined benefits plan – Gratuity Gratuity is administered through Group Gratuity Scheme with Life Insurance Corporation of India (LIC). The LIC raises demand for annual contribution for gratuity amount based on its own computation without providing entire details as required by the Ind AS 19 “Employee Benefits”. Hence the Group obtains separate actuarial valuation report as required under Ind AS 19 “Employee Benefits” from an independent Actuary. The maximum amount as per these two valuation reports is recognised as liability in the books of accounts. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligations. Such plan exposes the Group to actuarial risks such as: investment risk, interest rate risk, demographic risk and salary risk. Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to market yields at the end of the reporting period on government bond yields; if the return on plan asset is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in equity securities and debt instruments. Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments. Demographic risk This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, medical cost inflation, discount rate and vesting criteria. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
The following table sets out the funded status of the Gratuity benefit scheme and the amount recognised in the Financial Statements as at March 31, 2018 and 2017. (` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Changes in present value of obligations (PVO) PVO at beginning of year 230.89 167.67 Interest cost 15.11 12.20 Current Service Cost 22.78 16.86 Past Service Cost- (non vested benefits) - - Past Service Cost -(vested benefits) 33.03 - Benefits Paid (10.00) (10.47) Transfer in - - Transfer out - - Contributions by plan participants - - Business Combinations - - Curtailments - - Settlements - - Actuarial (Gain)/Loss on obligation (14.76) 44.64 PVO at end of year 277.05 230.89 Interest Expenses Interest cost 15.11 12.20
166 | Annual Report 2017-18 (` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Fair Value of Plan Assets Fair Value of Plan Assets at the beginning 151.61 152.41 Interest Income 14.50 11.14 Net Liability PVO at beginning of year 230.89 167.67 Fair Value of the Assets at beginning report 151.61 152.41 Net Liability 79.27 15.27 Net Interest Interest Expenses 15.11 12.20 Interest Income 14.50 11.14 Net Interest 0.60 1.05 Actual return on plan assets 0.03 4.78 Less Interest income included above 14.50 11.14 Return on plan assets excluding interest income (14.48) (6.37) Actuarial (Gain)/loss on obligation Due to Demographic Assumption 9.65 (4.12) Due to Financial Assumption (21.59) 0.19 Due to Experience (2.83) 40.33 Total Actuarial (Gain)/Loss (14.76) 44.64 Fair Value of Plan Assets Opening Fair Value of Plan Asset 151.61 152.41 Adjustment to Opening Fair Value of Plan Asset 70.18 2.53 Return on Plan Assets excl. interest income (14.47) (6.37) Interest Income 14.50 11.14 Contributions by Employer 2.38 2.38 Contributions by Employee - - Benefits Paid (10.00) (10.47) Fair Value of Plan Assets at end 211.83 151.61 Past Service Cost Recognised Past Service Cost- (non vested benefits) - - Past Service Cost -(vested benefits) - - Average remaining future service till vesting of the benefit 33.03 - Recognised Past service Cost- non vested benefits - - Recognised Past service Cost- vested benefits 33.03 - Unrecognised Past Service Cost- non vested benefits - - Amounts to be recognised in the Balance Sheet PVO at end of year 277.05 230.89 Fair Value of Plan Assets at end of year 211.83 151.61 Funded Status (65.22) (79.27) Net Asset/(Liability) recognised in the balance sheet (65.22) (79.27)
CDSL | 167 FINANCIAL STATEMENTS - CONSOLIDATED
(` in Lakhs) Valuation Result as at March 31, 2018 March 31, 2017 Expense recognised in the profit or loss Current Service Cost 22.78 23.79 Net Interest 0.60 1.05 Past Service Cost- (non vested benefits) - - Past Service Cost -(vested benefits) 33.03 - Curtailment Effect - - Settlement Effect - - Expense recognised in the profit or loss 56.42 17.92 Expense recognised in the Other Comprehensive Income (OCI) Actuarial (Gain)/Loss recognised for the year (14.76) 45.02 Asset limit effect - - Return on Plan Assets excluding net interest 14.47 6.37 Unrecognised Actuarial (Gain)/Loss from previous year - - Total Actuarial (Gain)/Loss recognised in (OCI) (0.29) 51.00 Movements in the Liability recognised in Balance Sheet Opening Net Liability 79.27 15.27 Adjustment to opening balance (70.18) (2.53) Expenses as above 56.42 17.92 Contribution paid - 2.38 Other Comprehensive Income (OCI) (0.29) 51.00 Closing Net Liability 65.22 79.77 Projected Service Cost March 31, 2018 22.79 22.79 Asset Information Cash and Cash Equivalents - - Gratuity Fund (LIC) 100% 100% Debt Security - Government Bond Equity Securities - Corporate debt securities - - Other Insurance contracts - - Property - - Total Itemised Assets 100% 100%
Assumptions as at March 31, 2018 March 31, 2017 Mortality Interest / Discount Rate 7.23 % to 7.63% 6.69% Rate of increase in compensation 4.00% 4.00% Annual increase in healthcare costs Future Changes in maximum state healthcare benefits Expected average remaining service (years) 13.36 19.53 Employee Attrition Rate (Past Service (PS)) PS: 0 to 42: 0% PS: 0 to 42: to 19.50% 2.67% to 19.50%
168 | Annual Report 2017-18 Sensitivity Analysis (` in Lakhs) DR : Discount Rate ER: Salary Escalation Rate PVO DR+1% PVO DR-1% PVO ER+1% PVO ER-1% PVO 256.84 300.15 297.80 258.51
Expected Payout (` in Lakhs) Year Expected Expected Expected Expected Expected Expected Outgo First Outgo Outgo Outgo Outgo Fifth Outgo Six to Second Third Fourth Ten Years PVO payouts 25.29 45.56 26.21 21.91 55.66 139.67
Asset Liability Comparisons (` in Lakhs) Year March March March March March 31, 2014 31, 2015 31, 2016 31, 2017 31, 2018 PVO at end of period 115.49 138.33 167.67 230.89 277.05 Plan assets 112.39 131.07 150.11 151.61 211.83 Surplus/ (Deficit) (3.10) (7.26) 15.83 (74.51) (65.22) Experience adjustments on 0.33 1.43 0.53 (6.36) (14.47) plan assets
35.2 Compensated absences The employees of the Group are entitled to compensated absences. The employees can carry forward a portion of the unutilised accumulating compensated absences and utilise it in future periods or receive cash at retirement or termination of employment. The Group records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Group measures the expected cost of compensated absences as the additional amount that the Group expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Group recognises accumulated compensated absences based on actuarial valuation. Non- accumulating compensated absences are recognised in the period in which the absences occur. The Group recognises actuarial gains or losses immediately in the statement of profit and loss.
During the year ended March 31, 2018 an amount recognised as an expenses in respect of compensated leave absences is ` 24.17 Lakhs (Previous year ended March 31, 2017 is ` 56.32 Lakhs)
36. SEBI had issued Depositories and Participants (Amendment) Regulations, 2012 on September 11, 2012 (the “2012 Regulations”). According to the 2012 Regulations, depositories were required to establish and maintain an Investor Protection Fund (the “IPF”) for the protection of interest of beneficial owners and every depository was required to credit 25% of its profits every year to the Investor Protection Fund. On January 21, 2016, SEBI has issued the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2016 (the “Amended Regulations”). According to these Amended Regulations, every depository shall credit 5% or such percentage as may be specified by the Board, of its profits from depository operations every year to the IPF. These Amended Regulations shall be deemed to have come into force from September 11, 2012.
37. From the year ended March 31, 2016 onwards, the Parent Company has determined the IPF contribution at 5% of profit from depository operation after making such contribution according to the Amended Regulations. The profit from depository operations has been determined by reducing the other income for the year from the Net profit before exceptional items and tax for the year after making such contribution. From FY 2012-13 to FY 2014-15 however, as per the 2012 Regulations, the Parent Company calculated
CDSL | 169 FINANCIAL STATEMENTS - CONSOLIDATED
IPF contribution at 25% of the profits of the Parent Company before tax, available after making such contribution. The amount contributed to IPF determined over the reported period is as under:
Table showing movement of IPF provision: (` in Lakhs) Particular For the year For the year ended ended March 31, 2018 March 31, 2017 Rate % 5 5 Opening provision 291.00 773.11 Add: Provision made during the year 408.39 459.75* Less: Amount transferred to IPF Trust during the Year 291.00 941.86* Closing Provision 408.39 291.00 * During the year ended March 31, 2017, the Parent Company has also contributed a sum of ` 168.75 Lakhs being the interest income from investments to be contributed to the IPF pursuant to SEBI Circular SEBI/HO/MRD/DP/CIR/P/2016/58 dated June 07, 2016. Thus, the total contribution during the year ended March 31, 2017 amounts to ` 459.75 Lakhs.
38. SEBI vide its circular no. CIR/MRD/DP/18/2015 dated December 9, 2015 (the “Circular”) has revised the annual custody/issuer charges to be collected by the depositories from the issuers with effect from financial year 2015-16. With an objective of promoting financial inclusion and expanding thereach of depository services through depository participants (DPs) in tier II and tier III towns, the Circular recommends that the Depository Participants (DPs) be incentivised by way of two schemes. In the first scheme, the depositories shall pay the DPs an incentive of ` 100/- for every new Basic Services Demat Accounts (BSDA) opened by their participants in specified cities mentioned in the Circular. In the second scheme, the depositories may pay ` 2 per folio per ISIN to the respective depository participants (DPs), in respect of the ISIN positions held in BSDA across all BSDA accounts in the depository. In order to manage the aforementioned incentive schemes, the Circular has directed the Depositories to set aside 20% of the incremental revenue received from the issuers. Pursuant to the Circular, the Company has set aside ` 307.03 Lakhs during the year ended March 31, 2018 (` 288.12 Lakhs during the year ended March 31, 2017) being 20% of the incremental revenue received from issuers during the respective years, towards the DP incentive scheme. Table showing movement of DP incentive provision: (` in Lakhs)
Particulars As at As at March 31, 2018 March 31, 2017 Opening provision 412.89 281.52 Provision for DP incentive made during the year 307.03 288.12 Amount paid (188.41) (156.75) Closing provision 531.51 412.89
Signatures to Notes 1 to 38
For and on behalf of the Board of Directors T. S. Krishna Murthy P. S. Reddy Chairman Managing Director & CEO DIN: 00279767 DIN: 01064530 Amol Purandare Bharat Sheth Place : Mumbai Company Secretary Chief Financial Officer Date : April 21, 2018 M No. A18078
170 | Annual Report 2017-18 NOTICE CIN: L67120MH1997PLC112443 Regd. Office: Marathon Futurex, 25th floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013.
NOTICE is hereby given that the Twentieth Annual 3. To reappoint Shri C. Venkat Nageswar as Director General Meeting of the Members of the Central liable to retire by rotation and in this connection Depository Services (India) Limited will be held to consider and if thought fit, to pass the following on Monday, the 20th day of August, 2018 at 4.00 resolution as an Ordinary Resolution: pm at Mini Theatre, 3rd Floor, P. L. Deshpande Maharashtra Kala Academy, Ravindra Natya Mandir, “RESOLVED THAT pursuant to provisions of Near Shri Siddhivinayak Ganapati Mandir, Sayani section 152 and other applicable provisions of the Road, Prabhadevi, Mumbai – 400025 to transact the Companies Act, 2018, the approval of members following business: of the Company be and is hereby accorded to the reappointment of Shri C. Venkat Nageswar (DIN ORDINARY BUSINESS: 07234179) as a director.” 1. To receive, consider and adopt the audited standalone and consolidated financial statements 4. To appoint Statutory Auditors and fix their of the Company for the year ended as on March 31, remuneration and in this connection, to consider 2018 along with the reports of Board of Directors and if thought fit, to pass the following resolution and Auditors thereon and in this connection to as an Ordinary Resolution: consider and if thought fit, to pass the following resolution as an Ordinary Resolution: “RESOLVED THAT M/s. S. R. Batliboi & Co, LLP with Registration No. 301003E/E300005 “RESOLVED THAT (a) the Audited Financial who have offered themselves as eligible under Statements of the Company for the financial section 139(1) and 141 of the Companies Act, year ended March 31, 2018 including the 2013 for appointment as Statutory Auditors of Audited Balance Sheet as at March 31, 2018 and the Company, be and are hereby appointed as Statement of Profit & Loss for the year ended on statutory auditor, from the conclusion of the th th that date and the Reports of the Board of Directors ensuing 20 Annual General Meeting till 24 and Auditors thereon; and (b) the Consolidated Annual General Meeting, subject to ratification Audited Financial Statements of the Company at every AGM, at remuneration of ` 16,00,000 as for the financial year ended March 31, 2018 statutory audit fees and tax audit fees exclusive including the Audited consolidated Balance Sheet of applicable taxes and other out of pocket as at March 31, 2018 and consolidated Statement expenses, which shall be reimbursed at actuals of Profit & Loss for the year ended on that date with additional function of Reporting on Internal and the Report of the Auditors thereon along with Financial Controls as required under section all annexures as laid before this Annual General 143(3)(i) of the Companies Act, 2013.” Meeting be and are hereby received, considered and adopted.” SPECIAL BUSINESS: 5. Appointment of Shareholder Director Shri 2. To declare dividend on equity shares of the K.V. Subramanian Company for FY 2017-18 and in this connection To consider and if thought fit, to pass the following to consider and if thought fit, to pass the following resolution as an Ordinary Resolution: resolution as an Ordinary Resolution: “RESOLVED THAT Shri K.V. Subramanian, “RESOLVED THAT a dividend at the rate of who was appointed as an Additional Director on ` 3.50 per share on the equity capital of the August 28, 2017 by the Board pursuant to the company for the year ended March 31, 2018 be provisions of Section 161(1) of the Companies paid to those shareholders whose names appear Act, 2013 and whose appointment was approved on the register of members / register of beneficial by shareholders by way of Postal Ballot on owners, as the case may be, on the record date.” December 21, 2017 and by SEBI on February
CDSL | 171 NOTICE
14, 2018 and whose term expires at the ensuing employer’s PF contribution and gratuity to Annual General Meeting of the Company and for be fixed at` 1,32,66,418/- as detailed below: whose appointment the Company has received a Particulars Amount (Rs.) notice under Section 160(1) of the said Act from a member proposing the candidature of Shri Basic 6,02,555 K.V. Subramanian for the office of a Director of HRA 3,01,278 the Company, be and is hereby appointed as a MA 50,213 Director of the Company subject to retirement by Gross 9,54,046 rotation”. PF 72,307
6. Approval for Re-appointment and Monthly total 10,26,353 remuneration of Shri P.S. Reddy as MD & CEO Yearly total 1,23,16,235 for 1 year w.e.f. April 1, 2018. LTA 6,02,555 To consider and if thought fit, to pass the following Gratuity 3,47,628 resolution as an Ordinary Resolution: CTC 1,32,66,418
“RESOLVED THAT upon recommendations of iii. Performance Linked Bonus (PLB) / Nomination and Remuneration / Compensation variable pay: Committee (“NRCC”) and approvals given by the Performance Linked Bonus (PLB) / variable Board of Directors of the Company and SEBI vide pay, if any, by whatever name called, as its letter dated March 28, 2018 for reappointment may be approved by the Board, be paid each and remuneration of Shri P.S. Reddy as MD & year to Shri Reddy on the recommendation CEO, the approval of the shareholders be and is of Nomination and Remuneration/ hereby given, subject to the provisions of section Compensation Committee which shall be 196, 197, 198 and 2013 read with Schedule V and exclusive of the annual compensation as all other applicable provisions of the Companies given above. Provided that the Board or the Act, 2013 and the Companies (Appointment and Committee, as the case may be, may fix the Remuneration of Managerial Personnel) Rule, actual Variable Pay in each year depending 2014, for the reappointment of Shri P. S. Reddy upon his performance level at such amount as the Managing Director and Chief Executive and at such proportion as may be decided by Officer of the Company for 1 year w.e.f. April 1, the Board/ or NRC subject to condition that 2018. the final Variable Pay shall not exceed one- third of final Total Pay for the respective year RESOLVED FURTHER THAT his reappointment as stipulated by SEBI. 50% of the amount so be approved on the following remuneration and decided shall be payable on deferred basis will be subject to the following brief terms and after three years. conditions.
iv. Perquisites: Terms of Appointment: In addition to the above, MD & CEO shall be i. As the Managing Director & CEO, Shri P.S. entitled to the following perquisites: Reddy shall, subject to the supervision, guidance and control of the Board of a) Shri Reddy will also be eligible to Directors, manage the business and affairs get benefits like chauffer driven car of the Company. maintained at the expenses of the Company. ii. Salary: His remuneration including Basic b) Company maintained landline at Salary, HRA, medical allowance, LTA, residence and mobile phone along with net connectivity as per the Company policy.
172 | Annual Report 2017-18 c) Premium for mediclaim and PA policies g) MD & CEO shall not be entitled to any at actuals as available to the employees, sitting fees for attending meetings of the as per the Company’s rules. Board or any of its Committees. h) The total remuneration including v. Other terms and conditions: performance linked bonus, if any, a) Contribution to Provident and Pension will be subject to the monetary ceiling Fund(s) as per the Employees Provident prescribed under Companies Act, 2013. Funds & Miscellaneous Provision Act, 1952 and Company policy i) Notwithstanding anything to the contrary contained herein, where in any financial Explanation: Contribution to Provident year during the currency of the tenure and Pension Fund(s) will not be included of the appointee, the Company has no in the computation of the ceiling on profit or its profits are inadequate, the remuneration payable to MD & CEO Company may pay him, remuneration to the extent these either singly or put by way of salary, allowances and together are not taxable under the perquisites not exceeding the ceiling Income-tax Act, 1961. laid down in Schedule V and as may be b) Gratuity at a rate not exceeding half decided by the Board of Directors of the month’s Basic Salary for each completed Company. year of service or part thereof in excess j) The appointment may be terminated of six months with the Company. at any time by either party giving to However, gratuity payable at a rate not the other party three months’ notice in exceeding half a month’s Basic Salary writing of such termination or as may be for each completed year of service shall decided by the Board. not be included in the computation of the ceiling on remuneration payable to “RESOLVED FURTHER THAT the amount and MD & CEO. manner of payment of variable pay will be subject c) Leave with full pay and allowances to guidelines issued by SEBI from time to time.” as per the Company’s Service Rules. Such leave will be permitted to be “RESOLVED FURTHER THAT the Chairman accumulated in accordance with the /Chief Financial Officer /Company Secretary Company’s Service Rules in force from jointly or severally be and is hereby authorised time to time. to do all such acts, deeds, matters and things as it may consider necessary, expedient or desirable d) Leave Encashment as per the Leave in order to give effect to this Resolution.” Rules of the Company. However, encashment of accumulated leave at the 7. Approval for Investment in excess of limits end of his tenure shall not be included stated in section 186 of the Companies Act, in the computation of the ceiling on 2013. remuneration payable to MD & CEO. To consider and if thought fit, to pass the following e) Leave travel Allowance at the rate of one resolution as a Special Resolution: month’s Basic Salary. “RESOLVED THAT pursuant to the provisions f) Any other payments which the Board of Section 186 of the Companies Act, 2013, or NRCC may decide to pay to the read with the Companies (Meetings of Board employees including working Directors and its Powers) Rules, 2014 as amended from in such manner and for such purpose time to time (including any amendment thereto as may be decided by the Board or or re-enactment thereof for the time being in the NRCC provided that such other force), if any, the Memorandum of Association, payments payable to MD & CEO together Articles of Association, relevant provisions of with salary and other emoluments such other Act as may be applicable, read with or its structure shall not exceed the rules and regulations (to the extent applicable) limits prescribed under the Act/or any the consent of the members of the Company be amendment thereto or re-enactment and is hereby accorded, to the Board of Directors thereof or under SEBI Regulations.
CDSL | 173 NOTICE
of the Company (hereinafter referred to as the Board or any Committee formed by the Board “Board”), to invest surplus funds of the Company from time to time be and is hereby empowered in the securities of the Body corporate in excess and authorised to take such steps as may be of 60% of aggregate paid up capital and free necessary and to sign and to execute deeds, reserves or 100% of free reserves, whichever is applications, documents and writings that may be higher or such other limits as may be prescribed required, on behalf of the Company and generally under Section 186 of Companies Act, 2013 read to do all such acts, deeds, matters and things as with relevant rules from time to time subject to may be necessary, proper, expedient or incidental maximum investments in securities at any point for giving effect to this resolution including filing of time not exceeding `1,200 crores. of certified true copy of this resolution with the concerned Regulators and Authorities.” RESOLVED FURTHER THAT, any Director of the Company or any person authorized by the
By order of the Board of Directors For Central Depository Services (India) Ltd.
P.S. Reddy Place : Mumbai Managing Director & CEO Date : July 18, 2018 DIN: 01064530 Registered Office Marathon Futurex, 25th Floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai.
NOTES: such person shall not act as proxy for any other 1. A MEMBER ENTITLED TO ATTEND AND person or shareholder. VOTE AT THE MEETING IS ALSO ENTITLED TO APPOINT A PROXY TO ATTEND AND, ON 6. The Register of Members and Share Transfer A POLL, TO VOTE INSTEAD OF HIMSELF. Books of the Company will remain closed on A PROXY NEED NOT BE A MEMBER OF THE August 13, 2018 in connection with the Annual COMPANY. General Meeting and for the purpose of payment of Dividend, if declared at the meeting. 2. Explanatory Statement pursuant 102(1) of the Companies Act, 2013 in respect of Items No. 5 to 7. The dividend, if declared, would be paid within 7 is annexed hereto. thirty days from the date of declaration to Members whose names appear as beneficial 3. All documents referred to in the Notice and owners with depositories or in the Register of Explanatory Statement are open for inspection Members as on August 13, 2018. at the registered office of the Company during business. 9. Subject to section 126 of the Companies Act, 2013 the dividend as recommended by the Board, 4. The instrument appointing a proxy must be if approved at the Annual General Meeting, will deposited with the Company at its Registered be paid to those members whose names appear Office not less than 48 hours before the time for on the Company’s Register of Members/Register holding the Meeting. of Beneficial Owners, as the case may be, on the record date. 5. A person can act as proxy on behalf of members not exceeding fifty and holding in the aggregate 10. The register of directors, key managerial not more than ten percent of the total share capital personnel and their shareholding maintained of the company carrying voting rights. However a under Section 170 of the Companies Act, 2013 member holding more than ten percent, of the and the register of contracts or arrangements in total share capital of the Company carrying voting which directors are interested maintained under rights may appoint a single person as proxy and Section 189 of the Companies Act, 2013 will be
174 | Annual Report 2017-18 available for inspection by the members at the all the members whose email IDs are registered meeting. with the Company/ Depository Participant(s) for communication purpose unless any member 11. In order to provide protection against fraudulent has requested for a physical copy of the same. encashment of dividend warrants, shareholders Further in terms of SEBI Circular No. CIR/CFD/ holding shares in physical form are requested to DIL/7/2011 dated 05.10.2011 and Regulation intimate the Company under the signature of the 36 of the Securities and exchange Board of India Sole/First joint holder, the following information (Listing Obligation and Disclosure Requirements) which will be used by the Company for dividend Regulation, 2015, the physical copies of Annual payments: Report is being sent through permitted mode to all other members who have not registered i. Name of Sole/First joint holder and folio no. their email address(es). Members may also note ii. Particulars of Bank Account viz: that the Annual Report for FY 2017-18 will also • Name of the Bank, Name of Branch, be available on the Company’s website www. Branch code cdslindia.com
• Complete address of the Bank with Pin 16. In compliance with the provision of Section Code Number 108 and other applicable provisions, if any, of • Account type, whether Saving Bank (SB) the Companies Act, 2013 and the Companies or Current Account (CA) (Management and Administration) Rules, 2014, as amended and Regulation 44 of the Securities • Bank Account number allotted by the and Exchange Board of India (Listing Obligations Bank and Disclosure Requirements) Regulations, 2015, Members have been provided with the facility to 12. In case of Shareholders holding shares in cast their vote electronically through the e-Voting electronic form, Bank account details provided services provided by Link Intime India Pvt. by the Depository Participants (DPs) will be used Ltd., on all resolutions set forth in this Notice. by the Company for printing dividend warrants. The facility for voting through electronic voting Shareholders who wish to change bank accounts polling paper would also be made available at the may advise their DPs about such change with meeting and the members attending the Meeting complete details of Bank Account including MICR who have not cast their vote by e-Voting shall be Code. able to vote at the Meeting.
13. Members are requested to intimate the Registrar 17. The members who have cast their vote by e-Voting and Transfer Agent, Link Intime India Private may also attend the Meeting but shall not be Limited, 247 Park, C-101, L.B.S. Marg, Vikhroli entitled to cast their vote again. (West), Mumbai 400083, immediately of any change in their address in respect of equity shares 18. Corporate members intending to send their held in physical mode and to their Depository authorised representatives to attend the Meeting Participants (DPs) in respect of equity shares are requested to send to Link Intime India held in dematerialised form. Private Limited a certified true copy of the Board resolution authorizing their representative to 14. Members holding share certificates under attend and vote on their behalf at the meeting. different folio numbers but in the same order of name are requested to apply for consolidation of 19. Members who have not registered their e-mail such folios and send relevant share certificates addresses so far, are requested to register their to the registrar and share Transfer Agent of the e-mail addresses for receiving all communication Company. including Annual Report, Notices, Circulars, etc. from the Company electronically. 15. Section 20 of the Companies Act, 2013 permits service of documents on members by a Company 20. Members / proxies / authorised representatives through electronic mode. Accordingly, as a part are requested to bring duly filled in attendance of the green Initiative, electronic copy of the slip along with their copy of Annual Report to the Annual Report for FY 2017-18 is being sent to Meeting.
CDSL | 175 NOTICE
Explanatory Statement pursuant to Section 102 of the Companies Act, 2013: ITEM NO. 5: Appointment of Shareholder Director term, the selection process will have to be conducted Shri K.V. Subramanian afresh. Accordingly, a revised Nomination and The Board of Directors had appointed Shri K.V. Remuneration policy was drafted and placed before Subramanian as an Additional Director of the the Board for its review and approval taking into Company on February 14, 2018 under Section 161(1) account recommendations of Gandhi Committee and of the Companies Act, 2013. As per resolution and was forwarded to SEBI. The Company has complied Postal ballot his term of office as Director expires at the with the requirements of said letter. Twentieth Annual General Meeting of the Company. Except Shri P.S. Reddy, none of the Directors of the In the meantime, the Company has received a notice Company is deemed to be concerned or interested in under Section 160 of the Companies Act, 2013 from the above resolution. a member of the Company proposing the candidature The Board recommends that the proposed Ordinary of Shri K.V. Subramanian for the office of Director. Resolution be passed by the shareholders. The Board recommends appointment of Shri K.V. Subramanian as a Director. ITEM NO. 7: Approval for Investment in excess of limits stated in section 186 of the Companies Act, Except Shri K.V. Subramanian, none of the Directors 2013. of the Company is deemed to be concerned or interested in the above resolution. The Company, with the approval of the Board, invests, in the ordinary course of business, surplus funds of The Board recommends that the proposed Ordinary the Company in securities such as units of mutual Resolution be passed by the shareholders. funds, bonds, Government securities and bank fixed ITEM NO. 6: Approval for Re-appointment and deposits etc. within the framework of investment policy remuneration of Shri P.S. Reddy as MD & CEO for approved by the Board and reviewed by Finance and 1 year w.e.f. April 1, 2018. Investment Committee. Whilst investment in units of On the recommendation of the Nomination and mutual funds managed by Trusts are exempted from Remuneration/Compensation Committee, the Board the provisions of section 186 of the Companies Act, of directors of CDSL approved reappointment of Shri 2013, certain investments in units of mutual funds P.S. Reddy as MD & CEO for a period of five years managed by body corporates fall within the purview of w.e.f. April 1, 2018 subject to SEBI’s approval. On section 186 of the Companies Act, 2013. The powers an application made to SEBI on January 23, 2018, of the Board to invest in securities is restricted upto SEBI vide its letter dated March 28, 2018 gave its 60% of aggregate paid up capital and free reserves approval for reappointment of Shri P.S. Reddy as MD or 100% of free reserves, whichever is higher. Any & CEO for 1 year w.e.f. April 1, 2018. In the said letter investment beyond the aforesaid limit would need SEBI had advised the Company to devise a policy for prior approval of the shareholders of the Company by appointment and reappointment of MD & CEO taking way of Special Resolution. into consideration the specific recommendations The value of investments in securities which the in the Gandhi Committee report with regard to Company invests exceed the aforesaid limits prescribed appointment and re-appointment of MD & CEO. under the Act/Rules and accordingly approval of the Further, SEBI advised us to send the duly approved Members is being sought by way of Special Resolution Nomination and Remuneration policy on or before subject to maximum investments in securities at any May 30, 2018 for them to review and approve the point of time of not exceeding `1200 crores. policy. SEBI also informed in the said letter that the The Board recommends that the proposed Special Gandhi Committee has recommended that MD & CEO Resolution be passed by the shareholders. may be re-appointment for a second term after doing None of the Directors of the Company is deemed to be a rigorous performance review and post the second concerned or interested in the above resolution.
By order of the Board of Directors For Central Depository Services (India) Ltd. P.S. Reddy Place : Mumbai Managing Director & CEO Date : July 18, 2018 DIN: 01064530 Registered Office Marathon Futurex, 25th Floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai.
176 | Annual Report 2017-18 Information to be provided to Shareholders under Reg. 36 of the Securities Exchange Board of India (Listing Obligations and Disclosure requirements) Regulations, 2015 in case of the directors who are appointed / re-appointed is as given below: Shri Venkat Nageswar Chalasani Shri Venkat, currently Deputy Managing Director (Global Markets) of State Bank of India, has over 32 years’ experience covering different aspects of banking and currently oversees the treasury portfolio of India’s largest bank, with significant exposure to various market segments including FX, money markets, equities and investments.
He has worked in various positions both in India and abroad, including postings in Bahrain, Bangalore and most recently Hong Kong, where he held the role of Regional Head (East Asia).
Shri Venkat is a director on the boards of several companies and industry associations, has been a part of various RBI Committees, and appears in print.
He is on the Board of CDSL as a shareholder director since June 28, 2016. He is not related to any other director of the Company. He has expertise in banking, treasury and exposure in various market segments including FX, money markets, equities and investments. He doesn’t hold any shares in the Company.
Sr. Name of Director Name of Companies in which the person holds Membership of No. directorship Committees Shri C Venkat Nageswar 1. Infrastructure Leasing and Financial Services Ltd NIL 2. Fixed Income Money Market and Derivatives NIL Association of India (FIMMDA) 3. Oman India Joint Investment Fund- Management NIL Company Private Limited 4. The Clearing Corporation of India Limited NIL 5. Macquarie SBI Infrastructure Management Pte NIL Limited 6. SBI-SG Global Securities Services Pvt Ltd NIL
Shri K.V. Subramanian Shri K.V. Subramanian is Head – Strategy, Process & Governance for Standard Chartered Bank, India. He has over 28 years of banking experience having joined ANZ Grindlays Bank in 1989 as a Management Trainee in the Capital Markets division. In 1992 he moved to TAIB Bank, Bahrain to set up the India Investment desk for the Bank and was also responsible for their proprietary equity and debt business. In 1996 he moved back to ANZ Grindlays Bank, India to run the Debt Capital Markets Sales business. Post the merger of SCB and ANZ Grindlays, he ran the Institutional Sales business for South Asia and from 2006 to 2011 was MD & Regional Head Capital Markets for South Asia. He has been responsible for leading some of the large Capital Market transactions for SCB from India.
From 2011 to till recently he was Managing Director and Head Financial Markets and a Member of the Country Management Group at Standard Chartered Bank, Indonesia. Shri K.V. Subramanian has a Master’s Degree in Management and a Bachelor’s Degree in Mechanical Engineering.
CDSL | 177 NOTICE
He is having expertise in banking, equity and debt business. He is not related to any other director of the Company. He doesn’t hold any shares in the Company.
Sr. Name of Director Name of Companies in which the person holds Membership of No. directorship Committees Shri K.V. Subramanian 1. Standard Chartered Investments and Loans (India) NIL Ltd. 2. St. Helen’s Nominees India Pvt. Ltd NIL 3. Standard Chartered (India) Modeling and Analytics NIL Centre Pvt Ltd 4. Standard Chartered Private Equity Advisory (India) NIL Pvt. Ltd 5. Standard Chartered Finance Private Limited NIL 6. Standard Chartered Securities (India) Limited NIL
Shri P.S. Reddy Shri P. S. Reddy joined Central Depository Services (India) Limited (CDSL) in November, 2006 as Chief Operating Officer and had been elevated to the position of Executive Director (Whole-Time Director) in 2009 and further elevated to Managing Director & CEO in April, 2012. Prior to joining CDSL, Mr. Reddy worked in BSE Ltd. for about eighteen years looking after various functions such as Listing, Surveillance, Inspection, Investor Relations, General Administration, Security, HRD, etc. Prior to joining BSE, for about a year and a half, he worked as a Research Assistant in Gokhale Institute of Politics & Economics, Pune.
Shri Reddy is a Director of CDSL Ventures Ltd. (CVL) - A wholly owned subsidiary of CDSL, the first and largest KYC Registration Agency (KRA) with over 140 lakh KYC records fully digitized. Mr. Reddy is a Member on various Committees of Securities and Exchange Board of India (SEBI) (Indian Securities Market Regulator) from time to time such as Secondary Market Advisory Committee (SMAC), Corporate Bonds & Securitization Advisory Committee (CoBoSAC), etc. He is also a Member on the National Council for Capital Markets of Confederation of Indian Industry (CII), The Associated Chambers of Commerce and Industry of India (ASSOCHAM), etc.
Mr. Reddy obtained Post Graduate degree in Economics from Central University of Hyderabad. He has been awarded Junior Research Fellowship of the UGC (university Grants Commission). He has also successfully completed Depository Operations Certification Examination Conducted by NISM (National Institute of Securities Market).
Further, he has attended Continuing Studies Capital Markets Training Program organized by Bernard M. Baruch College of The City University of New York. He has also been awarded a certificate of successful participation after passing the examinations for the courses on i) Regulation of Environmental Law, ii) The Law and Economics of Property Law and iii) Competition and Regulation from Law and Economics Perspective conducted by Institute of Law and Economics, Hamburg / Germany and Centre for Advanced Studies in Law and Economics, Ghent / Belgium and co-organized by Indira Gandhi Institute of Development Research, Mumbai along with National Law School of India University, Bangalore and University of Hyderabad under Asia Link Project “Human Resource Development in Law and Economics for India and Europe”
He is having expertise in Business Administration and Management. He is not related to any other director of the Company. He doesn’t hold any shares in the Company.
Sr. Name of Director Name of Companies in which the person holds Membership of No. directorship Committees Shri P.S. Reddy 1. CDSL Ventures Ltd. NIL 2. CDSL Commodity Repository Limited NIL
178 | Annual Report 2017-18 Instructions for shareholders to vote electronically: Remote e-Voting: In compliance with the provisions Members are requested to take following steps: of Section 108 of the Companies Act, 2013, read 1. Visit the e-Voting system of LIIPL. Open web with Rule 20 of the Companies (Management and browser by typing the following URL: https:// Administration) Rules, 2014, as amended and the instavote.linkintime.co.in. provisions of Regulation 44 of the Securities and Exchange Board of India (Listing Obligations and 2. Click on “Login” tab, available under Disclosure Requirements) Regulations, 2015, the ‘Shareholders’ section. Members are provided with the facility to cast their 3. Enter your User ID, password and image vote electronically, through the e-Voting services verification code (CAPTCHA) as shown on the provided by Link Intime India Private Limited (LIIPL) screen and click on “SUBMIT”. on all resolutions set forth in this Notice, from a place other than the venue of the Meeting (Remote e-Voting). 4. Your User ID details are given below: a. Shareholders holding shares in demat The remote e-Voting period commences on August 17, account with NSDL: Your User ID is 8 2018 (9.00 a.m IST) and ends on August 19, 2018 Character DP ID followed by 8 Digit Client ID (5 p.m. IST). During this period, Members of the Company, holding shares either in physical form or in b. Shareholders holding shares in demat dematerialized form, as on the cut-off date of August account with CDSL: Your User ID is 16 13, 2018, may cast their votes electronically. A person Digit Beneficiary ID who is not a Member as on the cut-off date should c. Shareholders holding shares in Physical treat this Notice for information purposes only. The Form (i.e. Share Certificate): Your User remote e-Voting module shall be disabled for voting ID is Event No. 180089 + Folio Number thereafter. Once the vote on a resolution(s) is cast registered with the Company by the Member, the Member shall not be allowed to change it subsequently. 5. Your Password details are given below: If you are using e-Voting system of LIIPL: https:// The voting rights of Members shall be in proportion to instavote.linkintime.co.in for the first time you their share of the paid up equity share capital of the need to follow the steps given below: Company as on the cut-off date i.e. August 13, 2018.
Click on “Sign Up” tab available under ‘Shareholders’ section register your details and set the password of your choice and confirm (The password should contain minimum 8 characters, at least one special character, at least one numeral, at least one alphabet and at least one capital letter).
For Shareholders voting for the 1st time (holding shares in Demat Form or Physical Form) PAN Enter your 10 digit alpha-numeric PAN issued by Income Tax Department (applicable for both demat shareholders as well as physical shareholders). • Members who have not updated their PAN with depository Participant or in the company record are requested to use the sequence number which is printed on Ballot Form / Attendance Slip indicated in the PAN Field. DOB/ DOI Enter the DOB (Date of Birth)/ DOI as recorded with depository participant or in the company record for the said demat account or folio number in dd/mm/yyyy format. Dividend Bank Enter the Dividend Bank Details as recorded in your demat account or in the company Details records for the said demat account or folio number. • Please enter the DOB/ DOI or Dividend Bank Details in order to register. If the above mentioned details are not recorded with the depository participants or company, please enter Folio number in the Dividend Bank Details field as mentioned in instruction 4.
If you are holding shares in demat form and had registered on to e-Voting system of LIIPL: https:// instavote.linkintime.co.in, and/or voted on an earlier voting of any company then you can use your existing password to login.
CDSL | 179 NOTICE
If Shareholders holding shares in Demat Form • General Guidelines for shareholders: or Physical Form have forgotten password: • In case a person has become a Member of Enter User ID, select Mode and Enter Image the Company after dispatch of AGM Notice Verification code (CAPTCHA). Click on “SUBMIT”. but on or before the cut-off date for E-Voting In case shareholder is having valid email address, i.e., August 13, 2018, he/she may vote in password will be sent to the shareholders the manner as mentioned at Sr. no. 5. registered e-mail address. Else, shareholder can • Institutional shareholders (i.e. other than set the password of his/her choice by providing Individuals, HUF, NRI etc.) and Custodian the information about the particulars of the are required to log on to e-Voting system of Security Question & Answer, PAN, DOB/ DOI, LIIPL: https://instavote.linkintime.co.in and Dividend Bank Details etc. and confirm. (The register themselves as ‘Custodian / Mutual password should contain minimum 8 characters, Fund / Corporate Body’. at least one special character, at least one numeral, at least one alphabet and at least one They are also required to upload a scanned capital letter) certified true copy of the board resolution NOTE: The password is to be used by demat /authority letter/power of attorney etc. shareholders for voting on the resolutions placed together with attested specimen signature of by the company in which they are a shareholder the duly authorised representative(s) in PDF and eligible to vote, provided that the company format in the ‘Custodian / Mutual Fund / opts for e-Voting platform of LIIPL. Corporate Body’ login for the Scrutinizer to verify the same. For shareholders holding shares in physical form, the details can be used only for voting on • During the voting period, shareholders can the resolutions contained in this Notice. login any number of time till they have voted It is strongly recommended not to share your on the resolution(s) for a particular “Event”. password with any other person and take utmost • Shareholders holding multiple folios/demat care to keep your password confidential. account shall choose the voting process 6. After successful login, you will be able to see separately for each of the folios/demat the notification for e-Voting on the home page account. of INSTA Vote. Select/ View “Event No” of the • In case the shareholders have any queries company, you choose to vote. or issues regarding e-Voting, please click 7. On the voting page, you will see “Resolution here or you may refer the Frequently Asked Description” and against the same the option Questions (“FAQs”) and Instavote e-Voting “Favour/ Against” for voting. Cast your vote by manual available at https://instavote. selecting appropriate option i.e. Favour/Against linkintime.co.in, under Help section or write as desired. an email to [email protected] or Enter the number of shares (which represents Call us :- Tel : 022 - 49186000. no. of votes) as on the cut-off date under ‘Favour/ • Voting at AGM: The Members, who have not Against’. You may also choose the option ‘Abstain’ cast their vote through Remote e-Voting can and the shares held will not be counted under exercise their voting rights at the AGM. The ‘Favour/Against’. Company will make necessary arrangements 8. If you wish to view the entire Resolution details, in this regard at the AGM Venue. The facility click on the ‘View Resolutions’ File Link. for voting through electronic voting system 9. After selecting the appropriate option i.e. Favour/ shall be made available at the Meeting. Against as desired and you have decided to vote, Members who have already cast their votes click on “SUBMIT”. A confirmation box will be by Remote e-Voting are eligible to attend displayed. If you wish to confirm your vote, click the Meeting, however these Members are on “YES”, else to change your vote, click on “NO” not entitled to cast their vote again in the and accordingly modify your vote. Meeting. 10. Once you confirm your vote on the resolution, A Member can opt for only single mode of voting you will not be allowed to modify or change your i.e. through Remote e-Voting or voting at the vote subsequently. AGM. If a Member casts votes by both modes 11. You can also take the printout of the votes cast then voting done through Remote e-Voting shall by you by clicking on “Print” option on the Voting prevail and vote at the AGM shall be treated as page. invalid.
180 | Annual Report 2017-18 ROUTE MAP OF AGM
Central Depository Services (India) Limited Regd. Office: Marathon Futurex, 25th floor, A-Wing, Mafatlal Mills Compound, N.M Joshi Marg, Lower Parel, Mumbai 400013. CIN: L67120MH1997PLC112443 Tel: 91-22-23023333 Website: www.cdslindia.com
Proxy Form [Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19 (3) of the Companies (Management and Administration) rules, 2014- Form No. MGT-11]
20th ANNUAL GENERAL MEETING-20th AUGUST, 2018 Name of the member(s) Registered Address
Registered email address
Folio no./ Client ID
DP ID
I/ We, being the member(s) of ……………………………………shares of the above named company, herby appoint
Name:……………………………………………………………….Email:………………………………………………………......
Address:………………………………………………………………………………………………………………………………....
………………………………………………………………………..Signature:………………………... Or failing him/ her
Name:……………………………………………………………….Email:………………………………………………………......
Address:………………………………………………………………………………………………………………………………....
………………………………………………………………………..Signature:………………………... Or failing him/ her
Name:……………………………………………………………….Email:………………………………………………………......
Address:………………………………………………………………………………………………………………………………....
………………………………………………………………………..Signature:………………………...
As my / our proxy to attend and vote (on a poll) for me / us and on my/ our behalf at the 20th Annual general Meeting of the Company, to be held on Monday, 20th August, 2018 at 4.00 p.m. at Mini Theatre, 3rd Floor, P. L. Deshpande Maharashtra Kala Academy, Ravindra Natya Mandir, Near Shri Siddhivinayak Ganapati Mandir, Sayani Road, Prabhadevi, Mumbai – 400025 and at any adjournment thereof in respect of such resolutions as are indicated below: Resolution Resolution Vote (Optional, see Note 2) number [Please put a (P) mark or please mention no. of shares] For Against Abstain ORDINARY BUSINESS 1 Adoption of Financial Statements and the Reports of the Board of Directors and Auditors for the year ended as on 31st March, 2018 2 To declare dividend on equity shares of the Company for FY 2017-18 3 To reappoint Shri C. Venkat Nageswar as Director liable to retire by rotation 4 To appoint Statutory Auditors and fix their remuneration SPECIAL BUSINESS 1 Appointment of Shareholder Director Shri K.V. Subramanian 2 Approval for Re-appointment and remuneration of Shri P.S. Reddy as MD & CEO for 1 year w.e.f. 1st April, 2018 3 Approval for Investment in excess of limits stated in section 186 of the Companies Act, 2013
Signed this …………………. day of …………………. 2018 Affix a …………………………………….. Revenue Signature of shareholder stamp of `.1/- …………………………………… Signature of Proxy holder(s)
Note: 1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting. 2. It is optional to indicate your preference. If you leave the “for” or “against” column blank against any or all of the resolutions, your proxy will be entitled to vote in the manner as he/ she may deemed appropriate. NETWORK OF CDSL DPs & SERVICE CENTRES
96
Jammu & Kashmir
99
526 Himachal Punjab Pradesh 104 72 Chandigarh Uttarakhand 574
1044 Arunachal Pradesh Haryana 13 11 New Delhi 1502 Sikkim 638 166 Rajasthan 11 Nagaland Uttar Pradesh 258 Assam 29 Bihar 10 Meghalaya Manipur 200 19 818 Tripura 1602 8 532 Jharkhand Mizoram West Bengal 169 Gujarat Madhya Pradesh Chhattisgarh 10 369
Daman & Diu Odisha 3 Dadra & 3332 Nagar Haveli
279 Maharashtra
Telangana
139 1365 Goa 1798 Andhra Pradesh
Karnataka
19 Andaman and Nicobar
Puducherry 944 1258 40
9 Kerala Tamil Nadu
Lakshadweep
Map not to scale. For illustrative purposes only. TOTAL DPs: 594 | TOTAL SERVICE CENTRES: 17,473*
State Service State Service State Service Centres Centres Centres Andaman And 40 Gujarat 1542 Mizoram 8 Nicobar Haryana 564 Nagaland 11 Andhra Pradesh 1363 Himachal Pradesh 99 Odisha 369 Arunachal Pradesh 11 Jammu and 96 Puducherry 19 Assam 166 Kashmir Punjab 522 Bihar 258 Jharkhand 199 Rajasthan 621 Chandigarh 68 Karnataka 1785 Sikkim 13 Chhattisgarh 167 Kerala 926 Tamil Nadu 1233 Dadra and Nagar 3 Lakshadweep 9 Telangana 262 Haveli Madhya Pradesh 519 Tripura 19 Daman and Diu 9 Maharashtra 3066 Uttar Pradesh 1479 Delhi 979 Manipur 10 Uttarakhand 103 Goa 139 Meghalaya 29 West Bengal 766 *One service centre in Dubai Central Depository Services (India) Ltd. A-Wing, Marathon Futurex, 25th Floor, Mafatlal Mills Compound, N.M. Joshi Marg, Lower Parel (E), Mumbai - 400 013 Ph.: 022-2302 3333 Fax: 022-2300 2043
CDSL Regional Offices
Ahmedabad Bengaluru Chennai Hyderabad Mr. Utpal Shah Mr. C. S. Harisha Mr. A. R. Vaasudevan Mr. Shiva Prasad Venishetty 203/204, Abhishree Avenue, No. 34 & 35, Annapurna Complex, BSE Investor Services Centre Flat No. 302, Mari Gold Pavani 2nd Floor, Near Nehru Nagar Circle, South End Road, Basavanagudi, Imperial A-Towers, Estate, Dwarakapuri Colony, S. M. Road, Ambawadi, Bengaluru - 560 004 8th Floor, 610, Anna Salai, Teynampet, Punjagutta, Ahmedabad - 380 015, Gujarat Mobile: 09902103263 Near Teynampet Metro Station, Hyderabad - 500 082 Phone: 079 - 32936232 Email: [email protected] Chennai - 600 018 Andhra Pradesh Mobile: (0) 9327691723 Mobile: (0) 9381995000 Phone: 040-48510926 Email : [email protected] Email: [email protected] Mobile: (0) 9347033350 Email: [email protected]
Jaipur Kochi Kolkata Ludhiana Mr. Yashwant Gupta Mr. Shibunath T. Mr. Moloy Biswas Mr. lnderjeet Singh Panchhi Jaipur Stock Exchange Building, BSE Investor Service Centre, Unit No. - A1 (II) & A1 (III), 214, Ludhiana Stock Exchange Ground Floor, Sree Lakshmi Tower, Block-A, 1st Floor, Building, Feroze Gandhi Market, J. L. N. Marg, Malviya Nagar, 2nd Floor, Ravipuram Road, 22 Camac Street, Ludhiana - 141 001, Punjab Jaipur - 302 017 Rajasthan Ravipuram, Ernakulam, (Abanindranath Thakur Sarani), Mobile: (O) 9872603304 Mobile: (0) 9314647826 Kerala - 680 016 Kolkata - 700 016, West Bengal Email: [email protected] Email: [email protected] Mobile: (0) 9895449539 Phone: (0) 8820274880 Email: [email protected] Email: [email protected]
New Delhi Pune Kanpur Indore Mr. Prateek Mohan Ms. Ashwini Thorat Mr. Devesh Dhar Dubey Mr. Krishna Gupta 101, 1st Floor, Office No. 15, 1st floor, Global Pedam Towers - II, 14/113, 320, Ratnamani Complex, Aggarwal Corporate Tower, Trade Centre, 1/1, Rambaug Cabin No. 369, 3rd Floor, 7/1, New Palasia, Plot No. 23, District Centre, Colony, (above HDFC Bank) Civil Lines, Kanpur Nagar, Indore - 452 001, Rajendra Place, L. B. S. Marg, Navi Peth, Kanpur - 208 001, Madhya Pradesh New Delhi - 110 008 Pune - 411 030 Uttar Pradesh Mobile No: (0) 9009529530 Mobile: (0) 9811504775 Phone: 020 - 24321762 Mobile No: (0) 9793636608 Email: [email protected] Email: [email protected] Mobile: (0) 8805775959 Email: [email protected] Email: [email protected]